Is The Breakout in Silver For Real?
Right now the break out in silver is about a real as it gets.
Silver (SLV) is higher by nearly 20% this week and has ripped through the all-important 20 dollar level that kept prices contained for more than five years. Also, this latest move had big volume behind it. More than any other week since 2011.
This week's rally happened in a short amount of time and with prices trading at the 2014 highs I'd expect to see consolidation or even some selling in the short term.
In March of this year, I watched the gold to silver ratio hit an all-time high and it was obvious that something had to give. Either silver was going to stage a massive rally or gold was going to get hit hard. But with the Fed stepping in and firing up the printing press, silver staged a massive rally gaining some ground on gold.
The current rally in silver has brought the ratio back to an area that provided stiff resistance over the last 17 years.
I've been patiently waiting and anticipating silver prices to play some catch up to gold and it's finally happening.
Even if silver was to rally 50% higher from here to $30, that would still only be a 50% retracement of the 2011 highs.
With gold threatening to break out to all-time highs and silver nowhere near its 2011 high, the potential for silver looks exceptional over the next few months.
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