Silver Market Update
Source: Clive Maund (10/31/10)
"Silver may reach renewed strength and new highs."
The action of the past week or so has been pretty much in keeping with what we were expecting, as the prolonged extremely overbought condition called for the reaction we eventually got. However, the strength late last week was certainly at the upper end of expectations, although what may now happen is that a minor double top forms, with the mid-October highs leading to the development of a trading range beneath the highs as described in the first paragraph. The reaction certainly eased the extremely overbought condition that developed silver and has thus opened up the possibility of renewed strength and new highs.
The long-term chart for silver certainly looks most encouraging, with the recent strong advance at last punching the price clear through the resistance near the 2008 highs and taking it up into "blue sky country." Like gold, silver is expected to accelerate away to the upside as the inexorable downward spiral of the fiat money system gathers momentum. With tight supply, increasing investment and speculative interest, the potential for silver to accelerate away to the upside should not be underestimated.
As usual, much of what is written in the Gold Market Update applies equally to silver, to which you are referred.