Silver was receiving an absolute drubbing at the start of the trading day. At one point during the morning hours, the white metal had fallen as much as -3.21%. And while the exact reasons for the decline are subject to debate – perhaps it was the Greece debt deal, or then again it might have been a forced liquidation given the trading volume – the good news coming out of today was how well silver responded in the face of this initial pressure.
Silver briefly challenged its newly established support at its 50-day moving average (the blue line on the chart) before rebounding sharply higher. By the early afternoon, it had recovered much of its losses and managed to hold its ground for the remainder of the trading day. And at the end of the trading day, silver closed down only -0.76% to remain within close striking distance of its recent highs.
Overall, silver has been performing well since mid August when the winds of monetary stimulus from the U.S. Federal Reserve began whipping up in earnest. And as the flow of liquidity from the Fed under QE3 steadily increases in the coming weeks and months, we may find that silver has much further to run to the upside before it is all said and done.
Disclosure: I am long silver via the Central Fund of Canada (CEF), which has a 55% allocation to gold and a 45% allocation to silver, as part of a blended precious metals portfolio allocation.
This post is for information purposes only. There are risks involved with investing including loss of principal. Gerring Wealth Management (GWM) makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made by GWM. There is no guarantee that the goals of the strategies discussed by GWM will be met.