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Now Is the Time to Buy Silver

By Jeff Clark
Thursday, August 7, 2014

The silver pullback we've been waiting for is finally here.
When we last looked at the metal in early July, it had rallied from less than $19 per ounce to more than $21. And it had just broken out of a long-term consolidation pattern.
I said the metal would likely rally to $26 sometime later this year. But I warned that silver was "wickedly overbought" in the short term and was vulnerable to some downside action.
I advised traders to hold off buying silver until it pulled back to around $20. It took around five weeks to do so, but silver fell below $20 per ounce on Tuesday.
And that means it's time to buy.
Take a look at this updated chart of silver...
silver price chart
When we looked at silver in July, it was bumping up against the blue down-trending resistance line. And both the 14-day relative strength index (RSI) and the full stochastics – two measures of overbought and oversold conditions – were extremely overbought. Similar readings flashed in mid-2013 and this past February before sharp corrections in the price of silver. So the metal looked set for a pullback.
Now, you can see that silver has pulled back from its blue down-trending resistance line. And the 14-day RSI and full stochastics are at oversold levels that typically precede rallies in the price of silver.
So I like the idea of buying silver here.
That doesn't mean you should leverage your home and put everything you have into the metal. There's still room for the silver price to work a bit lower.
But if you believe, as I do, that this is the beginning of a new bull market for silver, now is the time to buy before it makes another move higher.
Best regards and good trading,
Jeff Clark

Further Reading:

Jeff says gold is also set to rally this year. "Gold has gone nowhere," he writes. "But that's about to change. Gold is setting up for a big move higher." Get all the details here.
"It's time to own gold stocks," Amber Lee Mason writes. "The problem is, gold stocks are extremely dangerous for the average investor… So today, I'm going to cover one of the biggest mistakes investors make with gold stocks." Find out what it is right here.

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Market Watch
Symbol Price
S&P 500 1923.49 +0.2% +13.3%
Oil (USO) 36.02 -0.4% -3.8%
Gold (GLD) 125.75 +1.5% +1.4%
Silver (SLV) 19.23 +0.9% +2.1%
U.S. Dollar 81.48 0.0% -0.2%
Euro 1.34 +0.2% +0.7%
Volatility (^VIX) 15.75 -6.6% +23.8%
Gold Stocks (^HUI) 241.38 +2.2% +10.2%
10-Year Yield 2.47 -0.4% -6.4%

From The Crux
World ETFs
Symbol Price
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China (FXI) 40.29 -0.4% +19.3%
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Japan (EWJ) 11.77 -0.4% +1.6%
Russia (TRF) 13.66 -0.6% +0.1%

Sector ETFs
Symbol Price
Biotech (PBE) 43.93 +0.9% +35.6%
Semis (PSI) 21.66 +1.0% +28.6%
Big Tech (QQQ) 94.97 +0.4% +26.0%
Transportation (IYT) 143.65 -0.4% +24.4%
Basic Mat (IYM) 86.41 +0.8% +23.8%
Health Care (IYH) 127.74 +0.3% +20.1%
Defense (PPA) 30.97 -0.6% +15.2%
Real Estate (IYR) 71.74 +0.5% +13.6%
Industrials (IYJ) 99.20 0.0% +13.4%
Consumer Svcs (IYC) 122.06 -0.1% +12.6%
Media (PBS) 25.14 -0.3% +11.9%
Telecom (IYZ) 30.13 -1.8% +9.9%
Software (PSJ) 35.71 +0.4% +9.9%
Financials (IYF) 81.71 +0.8% +10.1%
Utilities (XLU) 40.22 -1.2% +6.8%
Water (PHO) 24.96 +0.4% +8.8%
Alt. Energy (PBW) 6.34 +1.6% +10.1%
Insurance (IAK) 45.90 +0.6% +7.8%
Construction (PKB) 21.14 +0.9% +6.8%
Retail (PMR) 33.07 +0.5% +1.1%