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Silver’s
short-term uptrend remains intact, notwithstanding silver’s big price
drop on Friday. The fundamental factors driving silver higher have not
changed. The outlook for silver remains very bullish.
There has
been no damage to silver’s technical condition. For example,
silver is above its 21-day moving average. Also, silver remains well
above $25, its last major resistance level. More importantly, the price
drop at the end of the week occurred with bullish sentiment taking a
nosedive. These conditions bode well for silver’s short-term
outlook, as does the following chart.
 
The above
chart will be familiar because it is the one I used on King World
News on October 28 to forecast a $30
silver price in less than 18 trading days. Silver closed that day at
$23.871. On November 9, only 8 trading days later, it reached $29.342
– nearly hitting my target. The good news is that my reading of
the above chart indicates that silver might yet reach $30 within my 18-day
target, i.e, November 23.
Note the
new pattern silver has formed. It is a pennant, and these have the same
features as the flag pattern upon which I based my $30 forecast. Both
are continuation patterns within uptrends.
They allow for a short-term consolidation, mainly to work-off some bullish
sentiment, which accurately describes what happened in silver as this pennant
formed over the past few days. A pennant pattern typically ends with an upside breakout.
My
expectation therefore, is that silver will break out of this pennant to the
upside, and probably early this week. The demand for physical silver
remains very strong, and it is the demand for physical silver, and not
paper-silver, that ultimately determines the silver price.
Most
trading in physical silver takes place in London and Zurich. The
weakness on Friday occurred after both of these centers had closed.
That means that prices were driven down in the paper market. We have
seen these late Friday raids to ‘paint the tape’ many times over
the past decade, so this latest one should not be a surprise. But what
is indeed a surprise to me is that the silver shorts would try this gambit
now when the physical market is so tight. Lower prices will only
heighten the demand for physical metal. Thus, I expect the silver price
to rebound sharply this week.
James Turk
Free Gold Money
Report
Article originally published by the Free
Gold Money Report.
James Turk is the
founder of the Free Gold Money Report and of GoldMoney.com. He is also the
co-author of The Coming Collapse of the Dollar (www.dollarcollapse.com).. Copyright
© by James Turk. All rights
reserved.
Copyright © 2008. All rights reserved.
Edited by James Turk
This material is prepared for general circulation and may not have
regard to the particular circumstances or needs of any specific person who
reads it. The information contained in this report has been compiled from
sources believed to be reliable, but no representations or warranty, express
or implied, is made as to its accuracy, completeness or correctness. All
opinions and estimates contained in this report reflect the writer's
judgement as of the date of this report, are subject to change without notice
and are provided in good faith but without legal responsibility.
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