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The silver markets had another bullish session on Tuesday, to continue the breakout for Monday. We still see the $30 level as a significant resistance area, but it should be said that we have finally broken out of the very tight range we had been in for over six weeks. Now that this is happened, we suspect that the $28 level will act as support.
We believe that silver prices will be much higher as we go into the fall and that there are two different distinct ways to play this market. The first way, which of course is a more aggressive one, is to simply buy silver now. However, if you're going to do this you need to understand that there could be a lot of choppiness over the next dollar or two. Alternately, if you are a bit more conservative, you may want to wait until the $30 level is broken on a daily close. This would be the last vestiges of this consolidation area and should signal much higher prices.
As for selling silver, we are not keen to do so at this moment in time and would need to see a break down below the $25 level in order to feel comfortable doing so. Because of this, and the unlikely event that will happen, we really do not see selling silver in our future right now. Needless to say, there will be bumps along the road but we feel that this market should continue to thrive.
One of the biggest reasons it will continue to gain is that central banks around the world are engaging in monetary easing. This drives demand for hard currencies such as silver and gold, and we think that's banks will be easing for the foreseeable future. This is the case; precious metals will do quite well.
We do think that gold will outperform silver however, won a nice balance of both in your portfolio should really begin to help you over the next couple months. Silver does have an industrial component to it, so as economic activity picks up; silver could get a boost there as well.