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« Gold Prices Fall on Worries About China Loan Deals | Main | John Embry - Gold & Silver Shortages & A Disastrous Endgame »
Wednesday
Jun252014

Is Silver the Cure for Silver Prices?

Background

There are a numerous contributing factors to be taken into consideration before making an investment in silver such as: supply and demand, industrial usage including solar panels, decorative jewellery, and short and long trading opportunities, price manipulation, various metrics such as silvers relationship to gold, the DOW Industrial Index, etc. The list of uses is huge and growing, so today we will look at just one of them which we think is important; the medical uses of silver.

Some of the medical uses for silver

For generations silver has been used for medical purposes by various nations across the world. Its medical uses have been recorded since the ancient Roman and Greek civilizations.

Nowadays the medical use of silver includes creams, wound dressings, and antibiotic applications. Colloidal silver is probably the most commonly known today, it is also used as a tonic when debilitation through disease or old age is encountered. One of Britain’s top doctors says the rise of drug-resistant superbugs could trigger an ‘apocalyptic scenario’ Professor Dame Sally Davies, Chief medical officer warns that within 20 years it may be impossible to fight common infections, this renders even routine operations dangerous, due to the over use of anti-biotics. So silver might be the antidote for superbugs.

From what we can glean silver helps by causing bacteria to leak in some circumstances, this leakage allows the antibiotics to enter the bacteria and destroy them. Silver is currently been used commercially in the manufacture of socks and allegedly it reduces the odour associated with socks. We also understand that silver is being utilized on a test basis in the manufacture of hospital beds, sheets and even the uniforms worn by ambulance drivers as a possible combatant against the spread of bacteria such as super bugs.

It could eventuate that silvers medicinal properties may not only be a cure for our ailments but the additional demand could push prices to much higher levels over the coming months and years.

Chart of Silver’s progress

It is difficult to see this breakout by silver over a 5 year period but it is there, so the next challenge will be to make a higher high above the $22.50 level. The RSI looks to have peaked at 80.65 and suggests that silver is firmly in the overbought zone. The STO has also peaked so we could see a small correction in the near term

Conclusion

I am a silver bull, but not a perma-silver bull, as that stance lacks the flexibility a trader requires in order to perform. If you believe that the time is right for silver to explode skywards then there are a number of things that you could do to position your portfolio for such an event. The acquisition of physical silver, silver funds, silver producers and even a well thought out ‘options’ strategy spring to mind. Our preference is to hold physical silver in our very own hands, invest in precious metals mining companies and trade options. We are of the opinion that an investment in physical silver means just that and not a piece of paper being held by someone else on our behalf.

In terms of timing; the summer doldrums have been turned upside down by the recent ‘pop’ in gold and silver prices, but we are still in June so there are a couple months to go before we are out of this period. That’s not to say we won’t be buyers of a particular stock if it offers a bargain entry level that we can take advantage of.

We believe there are times to be fully invested and times to exercise a little caution. At the moment we are not prepared to adopt a cavalier approach to silver investment or their associated producers as we have been through a number of false dawns over the last few years, so we need a tad more certainty before we can fully commit our funds.

 

Go gently.

 

The miners have started 2014 very well indeed on the back of rising gold prices, so the question is; is this the real deal or another head fake? Is the bottom really in? Could there be a final capitulation just ahead of us? Will the summer doldrums take the PMs lower?

If you would like to know which stocks we are buying and selling please join us atStock Trader our premium investment service.

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