For the first time in 2013, silver has broken out above its 75-day moving average. The bearish trend (trading below the 75-day moving average) began in December, 2012. Silver has led the precious metals sector higher last week, rallying 4.4%. U.S. mint sales of silver coins reached a new record at the end of July on a cumulative 12-month basis according to etftrends.com. Fundamental analysts believe current silver production has been curtailed on lower prices.
Moves above and below the 75-day moving average are usually a good indicator of changes in intermediate term trading trends. We recommend buying the Sprott Physical Silver Trust (PSLV) on the upside breakout. If PSLV were to break back below its simple 75-day moving average for a few days, we would use this potential event as a sell signal. With silver barely above the 75-day moving average, buying it now provides the investor with significant potential upside and a tight stop-loss in case the precious metals rally falters.