Gold prices have been rising firmly during those past 10 days, and so did Silver prices as well. And as Gold bulls should struggle to clear the immediate resistance around $1,000, Silver bulls are likely to be capped by the level of $16.50. It is actually the resistance level where the price closed yesterday.
In intraday session, a spike drove the price to a high of $16.86. As often, this resistance is an horizontal line that corresponds to a previous support line. This support level was valid during three months last year, between April and June (see the blue rectangle on the chart).
The price action posted several lows on this level, therefore around $1,650, before it rebounded later to $19.55 (point A).
The support was eventually broken in August 2008 and this triggered a sharp correction to the low point of October 2008 (at $8.40, point B). A bullish trend then developed and in early June this year, a first attempt to reach back the previous support failed at $16.25.
After a correction, the precious metal price bounced back at $12.45 and has been rising to date.
From the low of July at $12.45, Silver prices have rebounded by 32%. On the short-term, this precious metal is now overbought. This is what indicates the Relative Strength Index (RSI) as it jumped below the critical level of 70. That’s why it is likely that a pull-back on the downside will occur during the coming sessions. It may be just a slight technical correction before a new attempt to breach the level of $16.50. This will probably happen if Gold surges above the key level of $1,000. Remember that those two metals are highly correlated but Silver price action often “follows” Gold price action.
The Fibonacci retracements drawn between the high of March 2008 (point D) and the low of October 2008 (point B) indicate that the 61.8% ratio corresponds exactly to the level of $16.50. That’s another indication that the price action should first correct.
In this scenario, a pull-back towards $15.00 may be possible before a potential rebound.
{ 3 comments… read them below or add one }
Out of interest, how would you go about buying silver or gold in Aus? Do you actually have to buy the physical product from a coin shop or somewhere (I’d imagine there would be quite a commission added to the spot price), or can you trade it like stocks?
Murray,
If you are after physical, you can contact the Perth Mint, or any of the bullion dealers in the country. Alas, traders also have to make a living, so you can expect to be in the hole as soon as you purchase, not unlike when you purchase property, or insurance. Consider it your insurance premium, lol. Either way you turn, someone is there to separate you from your money. If you are happy to have a paper promise that tracks the gold price, the etf that goes by the ticker name GOLD could be worth investigating. You can buy it in your trading account at a minimal cost, and each share is backed, I think, by 1/10th of a troy ounce of fine gold. Or at least that is the promise. Holding the actual physical metal necessarily comes at a premium, which you can justify to yourself as the cost of eliminating third party risk. Good luck.
If you buy the acutal metal:
The Mints
Bullion Refiners
Bullion Dealers
Coin Shops
Ebay
You can also buy Perth Mint gold and silver certificates in allocated or unallocated forms.
The Mints are the Perth Mint and Royal Australian Mint.
Bullion Refiners include ABC (Australian Bullion Company) – in Sydney – just walk in and buy, or call, direct transfer money and they will send to you
Dealers include Ainslee and goldsilverbullion.com.au
Coin shops will charge the most I’d guess – you pay the premium for a coin and then the margin for the shop.
Some “shops” have no shopfront to speak of, eg International Numismatics in Melbourne
The GOLD ETF is another option – though you don’t own it, suffer capital gains tax, pay a “minding fee” (even though you can’t get the gold) and pay brokerage fees – exit and entry.
It is important to consider the premium paid…
Silver seems to have a higher “spread” (the difference in price per ounce between what a dealer will sell it for and buy it for). I don’t know why, though it may be due to the relatively fixed costs of fabrication, whixh are obviously going to be relatively tolerable for gold bought at over 1000 per ounce, than silver at 16-17 per ounce
ABC has a nice table of buy and sell prices per ounce on their website..
http://www.ausbullion.com.au/liveprices.php
Bullion metal lumps seem to be cheapest – my guess is it will be cheaper from a refiner than a distributor of that refiner.
Coins have a fabrication premium, though they are also legal tender (yet the face value is pathetic)
Coins are likely to cost more from a shop than direct purchase (in person or online) from the Mints.
When there was increased demand in November last year I was told by a number of dealers they couldn’t get any. The papers were full of stories about the Perth Mint ceasing any new orders because it had a 3 month delay to fill existing orders.
But what they didn’t tell you was..
This applied only to most of their range of sizes and lines
There was always plenty of one ounce .9999 gold kangaroos available with only a week’s delay open to individual investors. I know this because I rang the Mint myself (there may have been a ration, but this only matters if you wanted a serious pile of coins at that moment).
Likewise for 20 coin rolls of one ounce .9999 silver kookaburras – in abundance.
As for sourcing the refiner or cheapest distributors – this would be useful information for someone to post here
You can also buy .9999 grade metal from AGS metals
http://www.agsmetals.com.au
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