Answer: Silver is at 200 dma
October commentary so far has triggered a sharp pullback in precious metals because of the growing belief that US Fed will increase interest rates once the election is over. That's considered bearish for precious metals. As a result, Gold and Silver has seen big fall in first half of this month.
Now Silver is at 200 dma...very attractive entry point for Bulls
As you can see in the chart above - Silver did incredibly well from Feb to July this year and hence any pullback to 200 dma will attract the attention of Bulls. If Silver breaks this support of 200 dma, then yes there will be panic and huge liquidation leading to sharp sell-off. But till that happens, the interest in Silver will be there around this level.
Here's the Basics: One should Buy strong asset on declines
Silver is up 45% in CY 2016. Silver is the New Gold. https://t.co/A1SPZzhagC
— Deepak Singh (@smarket) July 5, 2016
Silver after a long time has made a comeback in 2016. Generally, when an underperforming asset performs after a long time - it has a tendency to surprise on the upside. Silver, unlike Gold, is a play on expanding the economy. Over 50% of global demand for silver comes from industries like chemicals, solar, medicine and technological appliances.
Lots of times we hear...hey I will buy when it pulls back but when asset does pullback, we have doubts. Sometimes doubts turn out to be true but sometimes...it pays to back the trend. What will happen - only time will tell.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers