Today we’re looking at another market that’s broken through its 200 DMA. You may think of it as gold’s ‘poor cousin’, but you’d do well to pay attention to silver. It’s primarily an industrial metal, but also a good investment with a strong track record during economic crises... and as an inflation hedge.
The chart below shows the spot price of silver (black line) for the year-to-date. The silver price stands above both its 200 DMA (red line, now 12.2) and 50 DMA (blue line, now 12.8). You can see that it’s leapt 24% in the first quarter of this year alone. It’s also just hit a fresh six-week high at $13.8 per ounce.
Silver shows a solid uptrend, peaking above both averages
Source: StockCharts
With the dollar continuing its slump against other world currencies, silver prices continue to rise. Despite falling industrial demand this year, strong investment demand should prop up prices. There has been a direct flow of funds into commodities. And indirectly too, via index and basket products offering exposure to the metal.
We’re bullish on silver for its inflation hedging qualities. Now that it has broken through the important technical resistance of the 200-day moving average, it should have some good momentum behind it.
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