Silver Chart - Spot Silver Prices Daily Chart 16th April 2009

Spot silver prices followed the same pattern as for the price of gold yesterday, trading in an extremely narrow range and sandwiched between the 40 day and 9 day moving averages, providing little in the way of direction for us as silver traders, and once again failing to breach the resistance area immediately above the current price threshold.  However, it is interesting to note that the performance of silver is marginally better than gold at the moment, which could partly be due to silver’s dual role, and in particular its designation as an industrial metal, and as a result could be benefiting the current demand for copper from China in particular.  Indeed China’s State Reserve Bureau has been accumulating large amounts of a variety of industrial commodities such as  aluminium, zinc, nickel, and rarer metals such as titanium, indium (thin-film technology), rhodium (catalytic converters) and praseodymium (glass).   This allows them the dual benefit of using up some of their huge US dollar reserves whilst profiting from cheaper commodity prices.   In the longer term once the economies of the world begin to pick up we could see this stockpiling have a positive effect on silver prices in the longer term, and is one of the reasons I believe that silver will ultimately outperform gold, both as an investment and also from a technical perspective.

Silver prices did manage to close marginally higher yesterday gaining 8 cents to settle at $12.770/oz. The move was supported by some short covering in the face of potential deflationary CPI data which usually is a downward trigger. Continued strength in copper as outlined above also supported the price of silver mirroring the demand from industrial metals. The key for the short term will be whether the resistance between $13 and $13.75 holds in place, and for any sustained move higher we will need to see both these price points broken with all three moving averages providing support.  My suggestion for today is to stay out of the market and wait for a clear trading signal either in the daily or weekly chart, neither of which we have a present.

The short term trend is bearish while medium and long term trends are bullish.

Support:    $12.650 (yesterday’s low)                                   Resistance: $13.100 (high of 02/04/09)

Support:    $12.550 (low of 14/04/09)                                   Resistance: $13.010 (high of 03/04/09)

Support:    $12.476 (9 day moving average)                              Resistance: $12.940 (yesterday’s high)