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Silver, a leveraged play on Gold

Posted: 09/05/2012 - 7:52 am

We could technically copy our bullish argument on Gold and apply it to Silver with one additional element to consider – Silver acts as a leveraged play to gold. The two metals are tagging along although Silver does show that a breakout is already in place. While we would not be surprised by a short term pull back, we remain bullish and maintain a long bias at this point.

As with Gold, we are buyers of Silver especially I on pull backs to the support zone (2750-2850). Our short term target sits around 3500 but we are confortable betting on a move to close to 4000 given the speculative nature of the metal. Of course, we are not necessarily talking in matter of days here as we could be in for a series of ebbs and flows before that level is attained.

With gold and silver, we are rallying from attractive support bases that lasted a couple of months or more and unless a major shock takes place on the macro front (i.e.) the central banks failing to deliver on the promise to ease, we will continue to look for further gains.

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