September 9, 2013 (by Frank Kollar)
Back in the end of May we posted an article about the liklihood of a rally for shares of IShares Silver Trust (NYSE: SLV). We were a bit too early in that article and SLV still had more downside left. At that time we did not recommend a bullish trade.
But since bear market lows were reached in the end of June, SLV has taken off to the upside, posting a 27% gain as of this week.
The same rally has occurred in gold though silver is greatly outperforming gold.
Silver is used as an industrial metal and a good deal of it is consumed. The demand for bullion is growing and investors can more easily afford it at $23 an ounce than gold at $1400 an ounce.
Courtesy of StockCharts.com
After such a steep decline in silver prices from October 2012 through June 2013, with the metal dropping some 47%, from $34 a share to $18 a share at the lows, the metal has a lot of upside potential.
Interest rates are now rising, with mortgage rates nearing 4.5% for a 30-year mortgage. The Fed may slow down on its bond and mortgage back securities buying in coming months, but we look for higher highs in shares of SLV.
Remember the volatility though. Any trade in SLV is a risky one.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy does not have a position in the IShares Silver Trust.