Keep Going Long Silver and Gold

Silver (Investing in Silver)

The iShares Silver Trust (ETF) (NYSE:SLV) and SPDR Gold Trust (ETF) (NYSE:GLD) are staying close to their respective 52-week highs and investors continue to pile into silver and gold as a hedge to the increased volatility in U.S. equities.

iShares Silver Trust (SLV) shares have traded between $13.83 and $19.44 over the past 12 months and its shares are now 4.85% away from its 52-week high.  SPDR Gold Shares (GLD) shares have traded between $92.21 and $123.56 over the past 12 months and its shares are 1.81% away from its 52-week high. - Silver had a very powerful breakout today as investors are seeking assets that are safe and will retain value during a debt crisis. Silver is seeing demand at these price levels as it's historically cheap relative to gold. If the ratio came down to the levels it was in 2006 it would be close to $27 an ounce. Silver is soaring because investors are realizing this is a hard asset, it's money, and it's historically cheap compared to gold.

Gold has reached overbought conditions from my July 28 buy signal. Right now gold is a bit overbought while silver is at an interesting buy point, having found support for the fourth time at its long-term 200-day moving average. Today’s breakout of the symmetrical triangle, a very bullish chart pattern, is a sign that silver has built up a lot of internal strength and could break out into new three-year highs. Remember, silver is significantly below all-time highs while gold has already broken into new highs.



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