Silver Bounces Off Lows

Silver has enjoyed a good run over the last five years.

In April this year spot silver hit a twenty three year high at over $20 an ounce but since then, in only seven months, has trended down to a low of  $8.83 an ounce in early London trading this morning, Monday 27th October, before bouncing off its low to $9.50 at midday ET. .

With stocks in every sector and every world exchange that has opened after the weekend continuing their downward plunge, it can no longer be argued that we are not well and truly into a worldwide financial crisis situation.

Keep this in mind when you consider the performance of silver over the last two months when all other commodities, and stocks, have fallen through the floor, many 40-50% down and that includes many blue chips.

Of course the same applies to gold in these turbulent times but significantly, after an early morning plunge to below $710 an ounce it is recovering to over $740 an ounce at midday in New York at1200 ET.

At this juncture both precious metals are showing resilience despite signs that stocks and commodities are showing signs of panic selling worldwide. To top this, it is reported that some central banks, including Russia and probably the IMF, are selling gold yet these sales are being absorbed by the market without too much discomfort.

Now the question is when can we expect the price to break out?

Will it, as we strongly suspect from a fundamental perspective, make a charge to the upside when the panic subsides and liquidity is restored or will the crisis spill over into silver and gold to the same extent as other sectors?

So far, whatever confidence remains in the investment world, it is evidenced in the price performance of gold and silver with the flight to bonds a last ditch resort to preserve some yield not obtainable in the metals.

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