Silver struggles with supply Will 2005 be another magical year? Clif Droke snippet Dec 28, 2004 Below is an extract from Clif Droke's Silver Strategies Review for Jan 2005 The price of silver peaked in November and has been below its yearly high ever since as we round out 2004 and head into the New Year. Silver futures broke below key support at $7.00 in December after reaching our $8.20 conservative upside target in the early part of the month. The $8.20 level proved to be terminal resistance earlier in December for one simple reason -- it represented a violation of the upper boundary of a 6-month uptrend channel in the daily chart and therefore qualified as a classic "channel buster" turnaround. In other words, the steep acceleration of the upward trend from November-December was a case of "too far, too fast," and trying to exceed the uptrend channel only added to this technical exhaustion. A sharp reversal down to the $6.60 level (basis December futures) effectively broke the 6-month uptrend channel and silver currently trades near its low for the month. Another important technical consideration for silver as we enter 2005 is the 100-day moving average. This moving average embodies the 20-week cycle and decisive violations of this MA usually signal a shift in the intermediate-term trend. What this implies for the silver price trend in the next several weeks is a lateral trading range at best to absorb all the supply created by silver's earlier sharp drop. Previous declines beneath the 100-day MA required on average about two months of consolidation before turning up again. I think we need to be cognizant of the fact that the major longer-term uptrend line in spot silver intersects at about the $5.50 area. As long as this remains unviolated in the early part of 2005 there is no reason to question the longer-term upward trend of silver. More importantly for traders is the intermediate-term trend, which is best signified by the 60-week (300-day) moving average. A secondary uptrend line in the silver daily chart intersects the $6.40-$6.45 area along with the very important 60-week moving average and should be closely monitored in the next few weeks. Whenever silver has closed the month of January below its 60-week moving average it has usually spelled trouble for the next few months. Right now, spot silver is still above its 60-week MA, but is testing it as we speak. This remains the critical uptrend line/trend indicator of the intermediate-term trend... More follows for subscribers, you can subscribe to the Silver Strategies Review here. --Clif Droke Publishing Concepts website: http://www.clifdroke.com/ email: clif@clifdroke.com Clif Droke is the editor of several subscription services including: 1) The Gold Strategies Review, a monthly forecast & analysis of gold and silver futures and precious metals stocks. Published online. $200/yr. 2) The Durban Roodepoort Deep (a.k.a. The DROOY Report) for traders, published online every trading day. Aimed at serious day and short-term traders of Durban Deep and followers of the XAU & HUI index. DROOY Subscribers are billed monthly $50/month. Two week 'trial' subscriptions now available $25, here. 321gold Inc