Silver - Strong buy based on COT, July 8th 2005

Two weeks ago, when silver was trading at $7.25 we gave a short-term bearish outlook based on COT. After dropping to the $6.80-$6.90 area, silver looks once again rather strong based on COT.

First of all, commercial net positions (pink area) are at levels, which have previously preceded short-term upswings in price (marked with green). Secondly, commercial longs stand at multi year highs (small red circle).

In addition, the long term up trend has held quite nicely. Depending on how you draw the up trend, you can interpret a small breach of trend (small blue circle), but at this point this can also bee seen simply as a bear trap. Even if the up trend would break, the fundamentals would not change. If you believe that silver is a manipulated market you have to admit that nothing would serve the 'manipulators' better than having the current up trend break and have TA oriented traders/speculators cover their positions.

This said, I don't see too much ammo in the commercials guns at the moment, with the not too high non-commercial long position (upper green line). If the old (COT) signs hold, we are soon going up again.

With the strong fundamentals, recently the increased possibility of a silver ETF and the current COT structure this is a time for silver bulls to be committed, even short term.

Join our mailing list
for free market updates!

Hosting by YMLP.com

Recently on silver:


Back to KultaKeskus.com Editorials

KultaKeskus.com makes no guarantee about the accuracy or completeness of any data or information given in this article. This article should not bee regarded as investment advise. All investors should make their own market research and base their decisions on their own analysis and judgment. In no event shall KultaKeskus.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein. The writer of this article owns bullion, mining and explorer stocks and has in general a bullish view on precious metals. The author has not been paid to write this article, nor has he received any other inducement to do so. The author's objective in writing this article is to invoke an interest on the part of potential investors in gold and silver to the point where they are encouraged to conduct their own further diligent research. You may reproduce and copy this article provided that you link it to the original source.

[Most Recent Quotes from www.kitco.com] [Most Recent Quotes from www.kitco.com]