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Feb
25
Silver Consolidates as it Prepares for the Inflationary Push Higher – Video Technical Analysis
Paco Ahlgren | Feb 25, 2010 | Leave a Comment |
This technical analysis video suggests the silver market may be in for some short-term consolidation, and even a period of slight downturn.
I believe there are a few reasons for the potential pullback we see in this technical analysis video.
- When inflationary price-increases seem imminent — as they do now to many of us — the hoards will pay a lot more attention to gold and commodities driven by industrial demand (like energy) than to subordinate commodities. While silver does have some industrial application, it’s nothing like energy.
- Gold is driven by its eons-long reputation, which always gives it a huge psychological push, and makes the yellow metal a great indicator of coming inflationary price pressure. Silver just doesn’t enjoy, to such a magnitude, the flight-to-safety quality that gold does.
- Before any explosive price breakout to the upside, technicians know to look for periods of consolidation — with the gap between highs and lows narrowing. That’s what I will be looking for in the silver market, as well as other commodities. I think everyone is finally starting to recognize the impact of high unemployment, a frozen jobs market, a crippled consumer, and bloated U.S. debt levels. As foreigners continue to mitigate their loans to the U.S., and as the results of the record-level printing and rate-reductions from quantitative easing really start, we’re going to see the next leg of of this crisis escalate exponentially faster.
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Disclosures: Paco is long TBT, UCO, and gold. He also holds U.S. dollars by necessity, pending the advent of private gold-backed currencies.
You can buy his novel Discipline wherever books are sold.
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