Last week's update was too bearish - especially as there have been a number of positive developments this week not only in both silver and gold but also with respect to major elements having an important bearing on Precious Metal prices.

In the Gold Market update we have seen how gold appears to have bottomed and to now be in position to advance again. The action in silver last week was similar, as we can see on its 6-month chart, with it recovering late in the week following an exact contact with the lower boundary of a channel that began to form last September. At the time of this contact a V bottom formed, as with gold, a sign that it had hit a low. Following this positive action and the improvement late in the week it is now in position to advance back towards the top of this channel, a move which would result in appreciable gains from the current level. Various indicators such as the MACD are oversold, providing the leeway for such an advance.

Silver

The 3-year chart makes clear why silver has been struggling to make headway in recent months. The reason is that the price has been battling heavy overhanging supply from the extensive trading that occurred around and above the current price during the first half of last year. While it is unlikely that it will overcome this resistance in near future, it does appear to be turning up in preparation for another run towards the top trendline. You may recall that last week's update employed a log chart on which silver's major uptrend in force from last October takes the form of a bearish Rising Wedge. On the arithmetic chart used here the same channel is parallel and at this point it is not known which of these channels takes precedence, as the number of contacts with the trendlines using the different scales is about the same on both, but we can at least be sure that the uptrend remains intact in both cases whilst the price remains above the lower support line (which it is closer to) on the log chart.

Silver 

Two important external factors having a bearing on the outlook for the silver price, in addition to gold of course, which are the outlook for the CDNX index and the broad stockmarket, have been discussed in the parallel Gold Market update.

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