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Watch for silver sector to get "discovered" in 2006Clif Droke
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In last month's newsletter we asked the question, "Have silver shares hit a major peak, as some analysts have suggested?" Our answer based on the charts was an emphatic "no." We also drew attention to the drastically insignificant number of Wall Street analysts covering the major silver shares, concluding that until more mainstream coverage is given to the white metal sector there is still plenty of room left for further growth. This assessment is a key factor as we enter 2006. The number of serious analysts and mainstream (non metals) newsletter writers giving coverage to the silver shares is still too insignificant to mention. But, slowly but surely, I'm noticing a perceptible growth in interesting as investors awaken to the growth potential of the silver sector. We're still a long way away from the next major top, but one of the things to be on the lookout for in the coming year is a rising trend of mainstream attention given to the sector. I fully expect it will come in some measure in 2006. Our silver stocks reviewed in last month's report for the most part registered an outstanding performance in the past few weeks. As you'll see in the stock review section below, I recommend that we take partial profits and raise protective stops to lock in further profits. The upward momentum is still there for the silver shares entering 2006, so hopefully the weeks and months ahead will see us taking even more profits. Turning our attention to the spot silver price, silver has been a strong performer throughout the past two months since bottoming in late August and remains above its rising 30-week and 60-week moving averages (the dominant longer-term trend lines) entering mid-December. Silver exceeded the $7.85 benchmark mentioned in last month's report as expected, and even exceeded our conservative upside target of $8.00.  Now it's time to watch the nearest round-number resistance at $9.00, which should eventually be exceeded on the upside. But the real test of resistance will come at the psychological $10.00 level, a level that everyone will be watching in the weeks ahead. On pullbacks, monitor the 15-day moving average intersection at $8.45. If the 15-day MA is violated on a closing basis, a test of the 30-day moving average usually follows. The 30-day MA intersects at around $8.00. Lots more follows for subscribers. You can subscribe here. --Clif Droke
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