By Andrea Tse, TheStreet
Silver prices reached a 30-year high as ongoing European debt-contagion fears and Federal Reserve Chairman Ben Bernanke's talk about a possible third round of quantitative easing in the U.S. brought out the sparkle in gold's cheaper alternative.
Silver for March delivery topped $30 in midday trading and settled up 46 cents at $29.74 as investors sought the inflation protection attributes of gold's "poorer cousin" and security from economic uncertainties. Speculators took advantage of the spike.
http://articles.moneycentral.msn.com/In … ;GT1=33009
Silver and Gold are traveling almost lock step now.
The recent period if you look at the charts shows there are a lot of gold and silver bears. That is one ugly chart and should scare most people.
If you look at the pole (July 2010 to October 2010), there was a small consolidation period afterwords. Silver looked like it was breaking away after it gave back some gains. That was a fast break and then it gave back all gains to the top of the last pole. It is rising again with a few hiccups.
So what this mumbo jumbo mean?
This means there are both bulls and bears participating in the market. We call these coils and the coils are large. These are going to put a very high beta on the stock. The translation is it is going to be a rocky road. Also if these coils are wound tight there will be a big break up or down.
If we look back a year, silver was a bit under valued as compared to gold. Now silver just went parabolic. That is not the case now.
The charts do not show a capitulation but they do show a great potential for a surprise. The reason is that there are a lot of people playing this on the sell side. If a person doesn't believe me they should look at the charts. I don't think that there is an impending downfall but there could be and it could spectacular.
If we want to go beyond the charts, understand silver. Silver is both a decorative metal as well as an industrial metal and if prices go high silver will be replaced with a different metal industrially.
and finally if gold has a large price movement down, so will silver. I will guarantee that.
Who knows. Some people look at the charts the same as reading tea leaves but there is something very important shown in the charts and it is the activity of the people who are participating in the market. The price is now volatile so this is not good sign for people who want a safe bet. If a person is playing the commodities market like most people do, this volatility will wipe out earnings even if silver trends up.
Now silver and gold are not necessarily going to go down. That is not what I am saying. It is just a very dangerous bet right now. Not because it is topping......It is because it is unclear.
If a person says a year from now I doubled my money, my hats off to them. However if a person loses all their money........I guess it is just a bet.
It becomes more of a gamble like the ole roulette wheel.
One last thing. If gold goes down, silver will go down by larger percentage and silver does not hold a value premium on gold now.
3 words and it goes for gold and oil as well; speculators, speculators, speculators!
I've noticed a lot more flyers from "hotel room buyers". These are people that travel around and buy up silver coins and jewelry out of their hotel rooms. The last flyer I saw was advertising $15 for U.S. silver dollars, which is far less than the current value of the silver in the coin.
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