This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Silver: Bullish Momentum to Continue

NEW YORK ( TheStreet) -- Silver is expected to remain bullish this week, supported by technical indicators, a weak dollar and weaker China economic data.

The bearish pattern in the dollar will likely continue from the past week, but could be limited this week due to the Michigan confidence index, falling jobless claims, and rising retail sales. A weak dollar will continue to spur the demand for silver, along with the yellow metal. Silver could see some lively sessions this week on the Fed's decision to ease money supply, thus undermining confidence in the U.S. dollar.

Meanwhile, European macroeconomic fundamentals are expected to improve, as indicated by the 1.7% expansion in Germany's GDP growth in the second quarter. Trade surplus and current account surplus could improve further, strengthening the euro against the dollar.

Among data releases scheduled for the week, China's economic data in the form of rising inflation, lower industrial production and retail sales, narrowing trade surplus and declining new consumer loans may knock the markets. Safe haven demand for silver and gold will likely improve, boosting silver prices.

Last week, COMEX silver futures for September delivery climbed as high as $18.70 an ounce before retreating, but gained 2.6% to close at $18.40. Silver prices breached and sustained above the two-week range bound mode. Silver was in white opening Morubozu candlestick formation, indicating the bullish trend in prices. The weekly RSI (14) is at 0.53, signaling continuation of the uptrend.

Past week, silver tracked gold to close at $18.47 per ounce. The initial surge in base metals' prices drove silver prices higher, but the correction in base metals toward the end of the week led silver to pare some of the gains. Base metals index on the LME (LMEX) was up 1.9% last week. Equity markets also ended positive with a few jerks during the week. The benchmark MSCI world index for stocks gained nearly 2.5%.

The gold-silver ratio fell to 65.15 from 65.64. Meanwhile, silver prices for spot delivery on the COMEX closed at $18.47 per ounce, while futures ended at $18.47 per ounce, suggesting that silver prices are in neither backwardation nor contango. Whereas, COMEX gold prices for spot delivery closed at $1205.4 per ounce, while futures ended at $1204.1 per ounce, indicating that gold prices are in backwardation.

The calendar spread, difference between two futures contracts, between silver Sept. 2010 and Dec. 2010 continued to remain thin at -0.06, signifying that the far month contracts closed higher than the near month contracts. Meanwhile, the calendar spread between gold Oct. 2010 and Dec. 2010 contracts closed at -1.20 in the past week.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CDE $2.50 1.21%
BVN $4.78 7.42%
EXK $1.47 0.00%
HL $2.10 0.48%
MVG $7.26 -1.63%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs