Finally, silver re-awakens. After a near straight-line recovery from August’s lows, silver broke out with a gap up to new highs for the month.
Source: stockcharts.com
The ETF for silver, iShares Silver Trust ETF (SLV), is of course following a similar pattern. With silver (and gold) being one of the few assets working on the long side, I expect a retest of the April highs to occur relatively rapidly. Stochastics are oversold, so silver might first rest a bit here, but the stampede back to silver could play out relatively quickly. The skeptics and naysayers have done what they can to shake folks out, but it looks like that process has come to an official end.
I suspect the market is anticipating a large catalyst in remarks coming out of the annual Jackson Hole Economic Policy Symposium. Federal Chairman Ben Bernanke is certainly not going to talk about tightening monetary policy. Instead, we can almost be sure he will remind us that monetary policy will remain extremely accomodative for at least two more years and, moreover, the Federal Reserve remains prepared to act even more forcibly if economic weakness deepens. I can almost hear the hum of the printing presses now…
Be careful out there!
Full disclosure: long SLV, PAAS, GLD, GG