Last week in this space I wrote about gold and how the metal had gone through a rough patch over the last eight months. Normally I wouldn’t follow a story about gold with a story about silver, but there were a couple of items that caught my attention with regards to silver that made me sit up and take notice.
Looking at the weekly chart of the iShares Silver Trust (NYSE: SLV), we see that the $18 level should act as support for the ETF. We also see that the SLV has a gap in the chart that needs to be filled that was created last April with the gap lower. The price before the gap down coincided with the low that was created in the summer of 2012, making this level even more important. I view this level as a good target point for SLV buyers to take profits. Should the SLV move from its current level to the $25.25 level, investors would be looking at a gain of over 35% and I see it happening before the end of 2014.
The other item of note on the chart is the continuing oversold status the ETF has been in for the last two months. The SLV went through a similar extended period of being in an oversold state about a year ago, but bounced from late June through the end of August. We see a similar pop in the price in the summer of 2012 as well, so we could be looking at a bit of seasonality in the price movement.
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