SILVER: ANOTHER GOLDEN OPPORTUNITY TO BUY SILVER
Peter Zihlmann
The long-term picture
In our last report, dated March 21, 2003, we recommended buying silver at $ 4.53. After briefly falling to $ 4.33, the silver price surged to $ 4.88. We liquidated all our silver long-positions on the way up.
Unable to break above the down-trend line, the silver price has fallen back into the support area where we bought in March. It is only logically consistent that we repeat at present our buy recommendation.
If, for any reason, the previous lows in the support area around $ 4.25 - $ 4.33 did not hold, we would, of course, have to reconsider our buy recommendation and a detailed analysis as to the reasons of this break-down would have to be made.
As long as the silver price does not close below last October's low, we can safely assume that the
up-trend is intact, possibly presenting an excellent buying opportunity for silver as well as for silver shares.
2003 may well be the watershed year for silver!
The medium-term picture
The silver price has been contained between a support and resistance line forming a wedge out of which the price has to break out eventually. We favor the break-out to the up-side, as silver
fundamentals also indicate this course.
We do not know when this will happen. Nevertheless, the $ 4.40 to $ 4.50 range seems to be an
excellent buying opportunity which may not be around for long.
The short-term picture
In the short-term, the trend is down since the silver price hit $ 4.88 on May 12. Support lies above
$ 4.40 and, in our opinion, it will prove strong enough to absorb any selling pressure.
But in case that support breaks, a stop loss at $ 4.15 should be put in place.
HOW TO PARTICIPATE IN THE UNFOLDING BULL-MARKET IN SILVER
It is quite interesting to note that silver shares have done far better than gold shares in relation to the underlying metal.
Silver shares offer a much higher leverage than the metal as huge reserves become more valuable at higher silver prices when deposits which at today's price are not worth extracting, will
become so at higher silver prices.
To receive UP-Dates on above companies, register at www.pzim.com or write to
gold@pzim.com
Fundamental Considerations
For 2003, silver demand is projected to increase, based on higher industrial demand, growing Chinese demand, greater Indian jewelery demand and higher investment demand. Silver supply growth should again be muted, with little change in silver mine supply, though it is unknown what Chinese government sales will be. A key driver of the silver price is the direction of the US dollar, and some analysts argue that the dollar will continue to weaken and that, as a result, all metal commodity prices will rise in US dollar terms.
The outlook beyond 2003 is also promising for the silver market, due mainly to the many
developing applications of silver in new technologies. In early 2003, a funding bill was introduced to the US Congress that would provide over $5 million for research into using gold and silver catalysts for fuel cell and other technologies. This could have enormous potential for significant new silver demand. Another bill in Congress provides funds for research into silver-based wood preservatives and marine anti-fouling paints as an alternative to arsenic-containing preservatives now being banned in many states in the US.
Finally, extensive research continues into silver-sheathed superconductors as mainstream
power transmitters. These three new applications of silver could together use more than 200 million ounces of silver annually if developed into commercial use.
Silver is a wonderful metal. Its strength as a commodity lies in the breadth and depth of its usage.
Today, millions of people throughout the world recognize silver's intrinsic value and have
made it popular as an affordable investment.
The following recommendations were valid at the time of writing, viz. at
and may no longer be valid at the time of reading.
Peter Zihlmann
June 4, 2003
Email this Article to a Friend 
Printer Friendly Version
