Tags: Guppy | gold | silver | buy

Daryl Guppy: Forget Gold, Buy Silver

By Michael Kling   |   Wednesday, 05 Dec 2012 08:03 AM

Gold gets all the attention, but silver has many key advantages, argues technical analyst and trader Daryl Guppy.

Current price trends point to a strong rise in silver, writes Guppy, author of "Trend Trading” and “The 36 Strategies of the Chinese for Financial Traders," in an article for CNBC.

"This is an alchemist's opportunity to turn silver into real gold."

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Silver prices move faster and generate larger profits, he says. The price of silver rose quickly in August and September, breaking out from $28 to $35 an ounce, a 25 percent return. Gold, by contrast, gave a 10 percent return for the same period.

Silver has a strong resistance level near $35. If it breaks past that level, the next upside target is about $43. After breaking past the $43 level, the next target would be about $50, the chartist predicts.

In addition, the trend line for silver is clear — much more easily defined and predictable than gold’s is.

One silver-buying strategy is to buy when price falls to $33.50 with the objective of holding the resistance level near $35, Guppy advises. "The first upside target is near $43 and this trade returns around 22 percent."

Another strategy is to buy when its price approaches $35 in anticipation of a price breakout, and then sell when it nears $43 for a return of about 42 percent.

Silver will rise and set a new record in 2013, predicts Peter Krauth, writing for Money Morning.

He gives several reasons for his prediction, including increased use of solar panels, of which silver is used to make; higher investor demand; and President Barack Obama’s re-election, so expect more of the same the next four years.

The gold-to-silver price ratio indicates silver is undervalued. The ratio is now about 60 - meaning an ounce of gold can purchase 60 ounces of silver - historically on the high side. The ratio will fall to close to 20 over the long term, Krauth predicts.

Silver is like gold on steroids, he says. It has historically tracked gold, but exaggerates its movements on both the upside and downside.

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