Gold & silver update: waiting for August
Precious metals investors are getting a little antsy as many newer investors and weak hands have been scared away after witnessing the first major correction since the financial crisis of 2008. While gold has only corrected 3% from its April high of $1,565, silver is down nearly 30% in the same time period. This article will focus on how I think things will play out over the next few months and into the close of 2011, with a focus on the price action in silver.
While the long-term fundamentals remain robust and I continue to expect silver to push towards $100/ounce at some point in 2012, the short-term situation is not so clear. The dollar may be the last fiat currency standing, as the sovereign debt situation in Europe deteriorates. In turn, the Euro weakness will likely provide strength for the dollar in the short term, along with the end of QE2 and continued silence from “The Bernanke” regarding QE3. Throw in weak seasonality during the summer months and we might have a recipe for lower silver and gold prices over the next month or two.
The technical chart for silver is not looking very bullish in my estimation and points to one of two scenarios. Either silver continues to be range-bound and consolidate within the $34 – $38 channel for another few months or the fundamental conditions mentioned in the previous paragraph create downward pressure and silver tests support at its 200-day moving average around $30.