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Go Slow on Silver?

Topics [ Hold Gold Silver Price ]


With silver having moved up around $6 (or 20%) in the past few weeks, the Screwtape Files blog cautions investors that silver may be primed for a correction.

With silver and gold having broken out of a long downward trend, Screwtape Files are concerned that “we're all suddenly being advised to jump back in, with a range of erstwhile blog hosts queuing up to tell us that the 'doldrums' are over, and that the bullion banks have 'lost control'.”

The basis of their caution is a similar technical chart pattern to the April 2011 where the RSI indicator was above 70 prior to silver’s correction from $49 down to $35. They see the same set up this time, with a high RSI combined with the price well above its 50 day moving average.

While they note that “the RSI by itself does not guarantee a crash any more than it precludes continued massive gains”, they see it as indicating that silver “is a tinderbox waiting for a match”.

Following on with our cautious theme today, Marc Faber of The Gloom, Boom & Doom Report said to CNBC on Thursday that he favoured holding physical gold (with a but):

“I would hold physical gold with a country that has a culture with gold such as Australia.  In a collapse, the gold price could fall 50 percent, but if everything else falls by 90 percent, then you are relatively well off. So I would hold some physical gold regardless of the economic outcome.”

While “losing less” is not exactly the most positive pitch for investing in precious metals, we do thank Marc for his recommendation of Australia as a safe location to hold your gold.

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