Quick Take: Silver Bottom Has Passed
NEW YORK (TheStreet) -- After Federal Reserve Chairman Ben Bernanke's testimony on Wednesday, precious metals were volatile. Telling TheStreet's Joe Deaux where he thinks they're headed next is Bradford Cooke, CEO of Endeavor Silver Corporation.
After initially jumping on Bernanke's testimony, the metals worked their way lower during the Q&A portion of his Capitol Hill visit. However, Cooke isn't concerned with the day-to-day moves of silver or how it initially reacts on days when the Fed is in the headlines.
Instead, he says it's more important what the Fed has to say, rather than what the market's knee-jerk reaction is.
Seasonally, silver and gold tend to bottom in the summer, before making an upward run in September through February. Cooke doesn't expect that to change this year, saying he expects silver to be higher by year's end.
He added that the metal, often referred to as the "poor man's gold," has had a tough six months of trading and looks to be creating a saucer bottom, which is a long-term, subtle bottoming pattern.
And while many analyst expect tapering to begin in September, Cooke's not buying it, stating that the economy and labor markets are still too weak to endure a withdrawal of stimulus.
But how the U.S. dollar reacts to tapering will likely be the fate of metal prices. The dollar has been remarkably strong this year, hurting metals. If it weakens, that would support higher silver prices.
Cooke added that many fund managers tend to go where the opportunity is. After a strong year in the stock markets, he says they are going to start looking at different markets where more opportunity exists. Specifically, silver and gold.
-- Written by Bret Kenwell in Petoskey, Mich.
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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.