Silver ETF Investors May Need To Be Patient For The Next Payoff (SLV, AGQ, ZSL, PSLV, GLD)

George Maniere:  While some charts show that the long term bull market in silver is intact and prices are heading higher I did some studying this morning and pulled my silver chart out to 2002. The study of technical analysis may tell a very different story when looked at in the micro view.

I much prefer to look at charts over a long period of time. Having created this chart today I believe silver investors may have to hold on to their metal for a little while longer before they see prices once again climb to new highs as some analysts are projecting from past trends. See the chart below of the iShares Silver Trust (NYSE:SLV).

No one knows the future, but if silver continues to behave as it has for the last 10 years we’ll trade in a range this year and then the next big move up should develop in 2012. The best strategy I see for the remainder of the year for those looking to buy would be to time purchases in the $26-28 per ounce area (don’t be surprised to see it test $22.00) and the $32-34 area for longer term appreciation and to be patient for the next longer term trend to develop.

The price of silver made a parabolic run in early 2011 before reaching a peak of about $50 US an ounce in April before dropping to the mid-30 range where it has bobbed around since. Some called this dip to an inevitable market correction, while others attribute it to a manipulation by high-profile financial institutions. Regardless of the cause, there are many opinions on where the price of silver will be headed in the near future, and most of them are actually very bullish, particularly for the long-term prospects.

Since no one knows for sure what price will do, one might want to look at what silver has done. The pattern that silver has been following throughout this bull market shows that silver has spiked on four occasions since the move began. Each move has been dramatic, and each move has been followed by a sideways market for a period of 12-18 months before the next significant move began.

While I remain bullish on silver, it will not surprise me if silver remains in a trading range – and it could be a big one – for the remainder of this year. This will give the market time to adjust, clean out the rest of any scrap sales, allow silver companies to sell forward some silver and generate much needed cash to expand and develop new properties and form a new base price to give investors more confidence to buy at these levels. Most of all I will practice patience.

Related ETFs: Sprott Physical Silver Trust (NYSE:PSLV), ProShares Ultra Silver (NYSE:AGQ),  ProShares UltraShort Silver (NYSE:ZSL),  iShares Silver Trust (NYSE:SLV), SPDR Gold Trust (NYSE:GLD).

Written By George Maniere From Investing Advice

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent.  Please feel free to email me at [email protected]

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