Originally published December 5th, 2010.

Although silver's uptrend which began in August has been steep, and it is still substantially overbought after its "running correction" of recent weeks, there doesn't appear to be any sign of it ending in the near future. On the contrary, silver looks set to continue to rise steeply and the rate of advance may even accelerate.

On its long-term chart we can see how, having broken above the strong resistance near to its 2008 highs, silver has embarked on a steep uptrend that looks likely to at least rival the powerful uptrend of late 2005 and early 2006 - and if it rivals it in percentage terms, we are looking at a target in the $36 area for this move, which is certainly suggested by the upper trendline drawn on the chart. Given that silver is a much more volatile market than gold, and that gold itself is expected to accelerate away to the upside, it is clear that a spectacular advance may be in store for silver which takes it considerably higher than our provisional $36 target.

The 6-month chart shows that silver's uptrend has been remarkably orderly, with the price finding support repeatedly in the vicinity of its 20-day moving average, and whereas the running correction in gold in recent weeks involved consolidation, the running correction in silver has been much more upwardly skewed so that it hardly looks like a consolidation pattern at all - this is a sign of great strength. Although it reacted little the running correction did serve to at least temporarily moderate the extremely overbought readings of the RSI and MACD indicators shown on the chart and other oscillators. On Friday silver advanced to a new closing high, putting it in position for another strong run.

As usual many of the general factors having a bearing on the outlook for the Precious Metals discussed in the Gold Market update are equally applicable to silver.