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Commodities Hit Hard - Buy!

May 06, 2011 8:13 AM ET
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Silver took a real whack this week. It plummeted straight to its 100 Daily Moving Average at about the $34 mark and at the time of writing is still in descending. Buying at these levels would be a sound move.

Downside risk is only about $6 as absolutely solid support should be found at the 200 DMA which lies at around the $28 mark. And on the upside, the sky is the limit!

If the 200 DMA is breached downward then you may as well stop trading silver as it is just too volatile. But I don't anticipate such an event.

The correction in gold has not been as severe as Silver's and I expect an orderly test of the $1440-1460 zone. As commented in my previous post, the long-term 32 Week Exponential Moving Average for gold indicates around $1450. If your bullish on gold, don't expect a move below this to last long.

Start believing!

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