Silver Technical Analysis: Headed to the Important Resistance of $16.8

Source: Forex News

Silver is often referred to as gold’s poorer cousin. In the 70s, when investors were allowed to trade gold, its price gained by triple digits. To investors, this was an interesting period to buy a commodity that is very related to gold, but one that was not very expensive. Silver offered the traders an opportunity to invest and get exciting returns.

After two heirs pumped their multimillion dollar empire to silver, the US regulators started regulating the commodity leading the price to fall from more than $50 to under $30. The two brothers, who had also borrowed massively to invest in gold had to file for bankruptcy.

The dynamics of silver and gold are different. For example, silver is available in more quantities than gold, and it is also used in the manufacture of many products. Gold on the other hand is found in limited quantities and its use is mostly in the investment community. As such, gold has always been more valuable than silver. Today, the gold and silver ratio is 1:80. This means that one ounce of gold equals to 80 ounces of silver.

This year, the price of silver has fallen by 2.67% while that of gold has gained by 0.69%. After rising to a YTD high of $17.34 in April, the metal fell to $16.02 before starting to rise. It is now trading at the 38.2% Fibonacci Retracement level. Traders should now watch for the pair to continue moving up, and possibly test the multi-weekly high of $16.83.

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