Silver Forecast December 27, 2012, Technical Analysis

The silver markets had a slightly positive session on Wednesday as we gained roughly $0.24 by the time trading closed. Looking at this chart though, it appears that we need to continue to consolidate in this general vicinity in order to build enough support to go higher. We still like the idea of buying silver overall, but recognize the fact that the next couple of sessions could be very quiet and just as sideways as we will have very few players in the market.

With this being said though, we are much more interested in buying than selling. As we are long-term traders, we are fine with going ahead and adding to our positions at this point in time, but should mention that is entirely up to what your risk profile is as to whether or not you may feel comfortable going long at this point in time. We have long-standing positions in the silver markets via the ETF markets and the physical markets. Because of this, we simply use this market as a way to enhance our gains over the long run.

Typically, we see markets fall at the end of the year as traders have to realize gains. This is especially true in the precious metal markets, as we have seen in both silver and gold lately. However, we typically will see those same traders reenter the market in January in order to prepare themselves for the upcoming year.

There are far too many central banks of their printing currency to think that we will not see some kind of rush into physical assets over the long term. Adding to that positive pressure is the fact that the central banks are also buying gold and silver, and as a result we really like a precious metal markets in general. These pullbacks have simply been opportunities to buy silver at a cheaper price so far, and we still feel the same way.

We will not sell this market, and do see the $30.00 level as an area that could offer significant support. Based upon the gap that we saw back in August, we should see plenty of buyers being interested in this market going forward.