PPR - The Portfolio Simulator Mulls over the Silver Situation
The Portfolio Simulator sold its position in the SLV two Mondays ago on the climax top type of move near the $50 price level on spot silver, and since then SLV has pulled down 16% from the peak as of today's (May 3rd) close. Is there a re-entry point?
The critical driver of the precious metals will continue to be a weak dollar, thus there is still potential for silver and gold to continue moving to new highs over time. For now the run in silver is done, but there are some things to watch for with respect to a potential entry point, and these center around what gold does. The chart of the SLV below shows where the ETF would need to go (highlighted area) for a roughly 20% pullback off the price peaks of last week.
Generally, if silver peaks out in the short-term and gold continues higher, eventually gold will drag silver back up with it, thus it may be a good strategy to buy into a 20% pullback in the SLV down into the 38.50 price area, more or less, IF the GLD exhibits strength. Notice from the second chart, GLD's daily chart, that the GLD is holding the 10-day moving average and is not pulling off nearly as much as silver. If the GLD holds up here or moves higher, it is likely that it will drag the SLV with it. Thus, if the GLD is seen to hold its ground as the SLV moves lower in the next day or two, the SLV could become buyable as long as the GLD remains constructive. This is a little tricky, but The Portfolio Simulator will act if this set-up occurs and it appears actionable, so stay tuned.
This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2013 Virtue of Selfish Investing, LLC. All rights reserved.