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.
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