GO
Loading...

Pro: Why Silver Could Catch Up to Gold

Getty Images

Gold and silver tend to track each other pretty closely,but it you've looked a chart recently, you probably noticed that gold has started to beat the lesser metal.

There are two main reasons for the divergence. First of all, the Cyprus news has made investors nervous -- and the market's first inclination is to buy gold, at the expense of all else, in times of distress. Second, the market still believes that silver has a small industrial component baked into its price.

However, the tendency is for silver to lag gold's initial move, and then play catch-up. I think we could be setting up to play out this scenario.

If silver trades above $29.30, this confirms strength,and I would consider getting long with an upside objective of $30.75. I would keep my risk fixed by set a stop down at $28.35.

An earlier version of this story included a headline that suggested gold could catch up to silver, when, in fact, silver could catch up to gold.

Watch "Futures Now" Tuesdays & Thursdays 1p ET exclusively on FuturesNow.CNBC.com!

Like us on Facebook! Facebook.com/CNBCFuturesNow

Follow us on Twitter! @CNBCFuturesNow

Featured

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.