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Silver & Platinum Supply Deficits Steepen, Underpinning Prices
By: Mike Gleason | November 26, 2023
As markets reopen following the Thanksgiving holiday, investors are feeling thankful that interest rates are no longer rising.
Stocks, bonds, and precious metals have all gained ground in recent days as long-term rates have come down. Meanwhile, expectations for the Federal Reserve to cut its benchmark short-term rate in 2024 have risen.
Minutes from the Fed’s latest meeting were released on Tuesday. They revealed policymakers intend to keep rates “restrictive” at current levels until inflation comes down further.
Despite giving no indication of cutting rates anytime soon, markets aren’t buying the Fed’s hawkish posturing. Traders in Fed funds futures are pricing in monetary easing next year starting in May. They currently expect four rate cuts before the end of 2024.
That’s reflective of a strong likelihood of recession next year amid deteriorating economic conditions. The recession by some measures may have already begun. The leading economic index fell again in October, marking a new low for the year in the LEI. Tighter credit conditions combined with persistently high inflation are crimping consumer spending as well as business investment.
For now, though, the stock market is flush with cash as investors see reason for optimism at least through the holiday season.
Gold, meanwhile, continues to oscillate around the $2,000 level. As of this Friday recording, the monetary metal comes in at $2,010 per ounce – up 0.9% since last Friday’s close.
Turning to the white metals, silver shows a weekly gain of 2.3% to bring spot prices to $24.46 per ounce. Platinum is jumping 2.9% to trade at $946. And finally, palladium is up 1.8% this week at $1,110 per ounce.
Looking ahead, metals markets could benefit from a bearish combination of headwinds in the U.S. dollar’s exchange rate – namely falling interest rates and a slowing economy.
They also stand to get a lift from bullish supply and demand fundamentals. Supply shortfalls are emerging across the metals space. Deficits are becoming especially large in silver, platinum, and palladium in particular.
According to the 2023 World Silver Survey, demand outstripped supply last year by nearly 238 million ounces, representing a massive 20% deficit. Another large deficit is expected this year amid rising industrial demand and flat, at best, mining output.
An even more lopsided supply and demand imbalance is occurring in physical platinum. The World Platinum Investment Council reported this week that the platinum market is on track to post a record supply deficit of over 1 million ounces for 2023. Total supply is down 3% this year. Demand, meanwhile, is up a whopping 26% compared to last year.
The story behind falling platinum prices in recent years has been that automotive use in catalytic converters is going away. But that story doesn’t square with the fact that platinum demand is gaining from a variety of sources.
Meanwhile, as over 70% of mined platinum comes from South Africa, the supply outlook for the scarce metal is precarious. South Africa has been plagued by constant power blackouts that have hampered production of some of the country’s largest platinum and palladium mines.
Of course, the media continues to insist that post-Apartheid South Africa under one-party rule is a bastion of democracy.
But the reality is that South Africa can no longer keep the lights on. And as basic infrastructure fails, sky-high crime rates coupled with threats of land and business seizures by the highly corrupt government are driving talented entrepreneurs and technical workers to flee the country.
Meanwhile, institutionalized racism against whites has risen to even higher levels as the nation rushes headlong into Marxism and Wokeism, with new laws even making it illegal for larger South African businesses to hire people with lighter skin.
That all bodes poorly for the future of South Africa’s critical mining industry.
In other parts of the world, the political landscape is shifting to the right. This week elections in the Netherlands and Argentina delivered big victories to anti-establishment populists.
Free-market economist Javier Milei won Argentina’s presidential election. Derided in the media as a “far right libertarian” and a “madman,” Milei campaigned with a chainsaw in hand to represent his plans to cut government bureaucracy. He has also vowed to abolish the country’s central bank and link the Argentine peso to the U.S. dollar in an effort to stamp out inflation.
Argentina was once known as the most prosperous country on the continent. But in recent years its economy has been wrecked by waves of inflation that have regularly exceeded 100% on an annual basis.
While the Federal Reserve note dollar has lost value at a much slower pace, it’s not exactly a sound and stable anchor for the Argentinian currency. Instead of being ripped off by Argentinian central bankers, citizens would see their purchasing power arbitrarily taken away by the U.S. Federal Reserve.
Regardless of the shortcomings of some of his reform plans, Javier Milei has the potential to turn around a troubled country much like Nayib Bukele has done in El Salvador. In just a few short years, El Salvador went from one of the most dangerous countries on the planet to the safest on the continent and one that’s now open for business.
Bukele has championed Bitcoin as an alternative to U.S. dollar hegemony and invited cryptocurrency enthusiasts to move to El Salvador. While Bitcoin has its advantages, it’s also quite volatile and untested as a monetary reserve asset on par with gold.
Biden administration officials and establishment media outlets are trying to paint Bukele as a dictator despite the fact that he has a higher approval rating than any other major head of state.
Media mouthpieces are also freaking out over poll numbers that show Donald Trump running ahead of Joe Biden in a 2024 rematch. Behind the scenes, Democrat operatives are panicking over Biden’s sinking standing with voters. They are trying to nudge the 81-year-old incumbent to bow out gracefully so that California’s publicity seeking Governor Gavin Newsom can finally admit that he seeks to be the Democrat nominee for President.
It’s not just Biden’s perceived lack of energy and concerns over cognitive decline that are behind his bleak poll numbers. As shock elections in Europe and South America suggest, broader forces may be building for a voter backlash against the entrenched political left.
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Silver Continues To Threaten A Breakout
By: Christopher Lewis | November 24, 2023
• The silver market rallied a bit during the trading session on Friday, as we are trying to get to the $24 level.
Silver Markets Technical Analysis
Silver rallied a bit during the trading session on Friday, as it looks like we are ready to test the $24 level above. The $24 level is of course an area where we’ve seen a lot of noise in the past, so it would not be surprising at all to see this market pullback from there again. However, if we were to break above that level, then it’s possible that we could go looking to the $25.50 level above. That’s where we have seen a huge double top, so I think that of course is an area where people will be paying close attention. I do think that’s where silver tries the gown, and now we have the 50-Day EMA rising to break above the 200-Day EMA, kicking off the so-called “golden cross.”
Looking at this chart, we could pull back toward the $23.50 level again, which is the bottom of the current consolidation area. All things being equal I do think that short-term pullbacks are buying opportunities but whether or not we break out anytime soon remains a question. Looking at this chart, we could go back and forth for some time, while we try to build up the next move in one direction or the other. In general, I think this is a situation where we are lacking a bit of momentum, but it certainly looks as if it is trying to build up enough pressure to finally move higher.
This will be especially helped by interest rates dropping in the United States if and when that continues, which is a major driver of what happens with precious metals, and silver is even more sensitive than gold to that most of the time. With that being said, I think we got a situation where the market is going to be one that you need to be very cautious with, but it certainly looks as if the buyers are doing quite well at the moment, and I do think that they will continue to lead the way in general. Whether or not we can break above the $25.50 level is a completely open question at this point.
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Silver Attempts to Rally Again
By: Christopher Lewis | November 22, 2023
• Silver displayed some volatility early in Wednesday’s trading session, initially gapping lower only to reverse course and exhibit signs of resilience.
Silver Markets Technical Analysis
In the grander context, I believe this market holds the potential to gradually edge towards the $24 level, and perhaps even surpass it. Nevertheless, it’s crucial to recognize that this specific market is susceptible to sporadic behavior, with the added complexity of being silver.
Beneath the surface, the 200-Day Exponential Moving Average continues to offer a degree of support, while the 50-Day EMA is making efforts to cross above the 200-Day EMA, hinting at the possibility of a “golden cross” formation. A bullish breakout could pave the way for the market to set its sights on the $25 level, potentially setting the stage for a move towards the double top around $25.50.
Conversely, should we witness a breakdown below the moving averages, there is a potential downside towards the $22 level, which previously served as a rebound point following lower-than-anticipated inflation figures in the United States. This implies that there remains optimism among market participants concerning the Federal Reserve’s potential adoption of a more accommodative monetary policy. However, such a shift in the short term appears improbable.
The prevailing hope revolves around the Federal Reserve at least considering adjustments to its monetary policy, providing cause for celebration among traders. The long-term outcome remains uncertain, and it’s essential to note that the silver market typically exhibits a negative correlation with the US dollar, a factor that demands attention.
For the time being, I have no inclination to partake in silver selling activities, and I believe that pullbacks could present viable buying opportunities. Nevertheless, one must exercise caution when entering this market. Additionally, it’s imperative to bear in mind that Thursday marks Thanksgiving, which means this week’s trading will be abbreviated.
Ultimately, silver’s recent performance has been marked by substantial fluctuations, but the potential for an upward trajectory towards the $24 mark continues. The volatile nature of the silver market and its relationship with the US dollar make it a market where caution is of vital importance. While the idea of potential buying opportunities during pullbacks remains. As Thanksgiving approaches, market participants should anticipate subdued trading conditions in the days ahead.
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Silver Falls to Kick Off the Week
By: Christopher Lewis | November 20, 2023
• The silver market fell significantly during the trading session in the early hours of Monday, as it looks like the market got a little bit overextended.
Silver Markets Technical Analysis
Silver has fallen rather hard to kick out the Monday session, as we have seen a lot of noisy behavior. All things being equal, this is a market that has found that $24 region to be a little too much, and we ended up forming a massive shooting star on Friday, which showed that perhaps we were a little overdone. Because of this, it does make certain amount of sense that we have pulled back the way we have. We have the 200-Day EMA sitting just below, and of course the 50-Day EMA is in the same region. Both of these moving averages are somewhat flat, so they may lose some of the efficacy of the moving averages offering support. That being said though, it could also be a scenario where buyers could be interested. Furthermore, we also have the $23 level underneath.
Ultimately, silver is going to be thrown around by a whole plethora of external factors such as industrial demand, as the metal is not only a precious metal, but also an industrial one. Furthermore, we also have to pay attention to interest rates coming out of the United States, because if they start to fall, that also can help silver. Taking out the top of the shooting star from the Friday session would be extraordinarily bullish and could open up a move to the $25 level, something that is still very much possible, but we may need to get a little bit of profit-taking out of the way in the meantime.
The size of the candlestick on Monday is somewhat impressive, but ultimately this is a situation where the market had gotten so far ahead of itself that the market had to sell off a bit. Ultimately, I think you have to look at this through the prism of finding a bit of value, but more importantly, finding the market somewhat stabilizing in the process as well. With this, I think you have to be cautiously optimistic, but probably patient more than anything else, waiting for an opportunity to get long of a market that clearly had gotten ahead of itself.
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Silver Continues to Threaten a Move to the Upside
By: Christopher Lewis | November 17, 2023
• The silver market rallied significantly during the course of the trading session again on Friday, as it looks like we are trying to break out.
Silver Markets Technical Analysis
Silver rallied significantly during the early hours on Friday, as we continue to see precious metals get a bit of a bid. Silver is trying to break out at this point and run toward the $25 level above. Keep in mind that silver is going to have a bit of a bid due to the geopolitical concerns out there and people are trying to protect their wealth. Furthermore, we need to pay close attention to the interest rate markets in the United States, which continue to drift a bit lower with yields, and that does help silver as well.
Ultimately, pullbacks at this point in time probably get bought into, but we also have to keep in mind that silver is highly sensitive to the industrial demand for the metal, as it is not just the precious metal, but it is a significant industrial one as well, especially when you start talking about green technologies.
Underneath, the 200-Day EMA would be massive support, but we would have to wipe out the Thursday and Wednesday candlesticks in order to reach it, and I think that would be your short-term “floor in the market.” As long as we stay above there, it’s likely that the market will continue to go higher and therefore I think pullbacks will end up offering buying opportunities that you can take advantage of. This will be especially true if the US dollar starts to shrink even further, because of course the silver market is priced in those very same US dollars.
Ultimately, I think silver probably goes looking to the $25 level, possibly even the $25.50 level. Anything above there, the market should go higher, and kick off a major “FOMO trade.” In general, this is a situation that continues to be very noisy, and of course silver is a situation where the contract is very difficult to hang onto with a huge position. Keep your position size reasonable, it’s the only thing that we can do to protect ourselves in this type of environment. It would not surprise me at all to see a bit of a pullback, but I also would expect to see buyers underneath.
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Silver Continues to Show Resiliency
By: Christopher Lewis | November 16, 2023
• The silver market rallied a bit during the course of the trading session on Thursday, as we continue to threaten a breakout.
Silver Markets Technical Analysis
Silver markets initially pulled back just a bit during the trading session on Thursday, only to turn around and show strength again. At this point, we are trying to break out and reach the $24 level. Breaking above the $24 level opens up the possibility of a move to the $25 level above. In fact, I think it’s probably only a matter of time before we get there, but silver also has a lot of noise in the market under normal circumstances, and it won’t be any different at this point.
The thing you need to keep in mind is that the interest rate markets can move silver quite violently, and if interest rates start to climb again, that could be negative for silver. It’s also worth noting that we are sitting right in an area that has caused a significant amount of resistance previously, so there is a certain amount of trouble just above. If we were to break above there, it would be a major breakout and it would confirm that silver was going to go much higher.
Another thing you need to pay close attention to is the idea of industrial demand. If we are in fact heading into a recession, demand for silver should start to drop and that could work against the market. On the other hand, you can also make an argument for the metal being a safety trade, as precious metals can be from time to time, although I am the first to admit that I like gold more for this type of scenario. Geopolitical concerns continue to drive the narrative to a lot of markets, and if those pick up a bit, that could drive silver higher also.
Finally, pay close attention to the US dollar, because it starts to strengthen, that can work against the value of silver, unless of course people were buying silver for safety, then both could rise at the same time. Either way, it looks like we are trying to break out, and short-term pullbacks toward the 200-Day EMA could be potential buying opportunities in this type of environment. Keep your position size reasonable.
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Unlocking Silver’s Potential: Technical Analysis Points to Bullish Momentum
By: Bruce Powers | November 13, 2023
• Silver’s resilient bounce from key levels hints at a potential bullish reversal, backed by monthly chart support and a promising bullish hammer candlestick pattern.
Silver further retraced its prior advance today to reach the 61.8% Fibonacci retracement area with Monday’s low of 21.87. Support was subsequently seen leading to an intraday rally. Today’s low is right near support of the long- term uptrend line that starts from the swing low from the year 2020 (C), while the 61.8% retracement is at 21.82. Further, on the monthly chart, today’s low successfully tested support of the 50-Month EMA at 21.87.
Bullish Reaction Off Lows Points to Higher Prices
Given the bullish reaction off today’s lows, it looks like there is a good chance it may be the low of the retracement. Silver is currently on track to end the day with a bullish hammer candlestick pattern. It reflects sellers dominating earlier in the session, but later in the session the bulls took over. And the bulls are set to close silver in a strong position, near the highs of the day.
Bullish Hammer Candlestick Pattern Today
A bullish hammer reversal candle provides a sign of strengthening upon a breakout above the candle, which would be today’s high of 22.35, at the time of this writing. It signals a potential bullish reversal upon a decisive breakout. This doesn’t mean silver goes straight up if a bullish signal triggers tomorrow or the next day. It is not uncommon to see an inside day first or an upside breakout followed by a pullback to within today’s price range.
Key Support Area Hit and Reverses
If we see bullish follow-through on silver from today’s low, it will turn out to be an ideal area to find support that kicks in a new round of buying as demand increases. There is a combination of support from the long term trendline and the 61.8% Fibonacci retracement, as well as the monthly indication noted above. The bullish reaction from the lows shows price being rejected to the upside thereby confirming support that may hold and lead to a bullish reversal.
Bouncing into Consolidation Range
A rally from current levels will quickly be encountering a block of consolidation that includes choppy price action plus the 50-Day and 200-Day EMAs within the range. Weekly price levels to watch (prior weekly highs) are at 23.24, 23.59, and 23.68. The higher price level is the recent trend high and the top of the consolidation range.
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Silver Shows Signs of Stability
By: Christopher Lewis | November 14, 2023
• Silver has initially rallied during the trading session on Tuesday as we are waiting to see whether or not the market will stabilize enough to turn things around.
Silver Markets Technical Analysis
Silver has rallied early during the trading session on Tuesday, as it looks like the hammer from the Monday session is trying to support the market. It’s worth noting that that Hammer had found a $22 level interesting enough to keep the market somewhat floating in that area. If we were to break higher from here, the next major area will probably be somewhere near the 50-Day EMA. Ultimately, I think that is an area where we need to pay close attention, because I would anticipate that we have a huge fight on our hands in that general vicinity.
That being said, think silver has the possibility of dropping from here again, but the bottom of the hammer from the Monday session will be something worth paying attention to, because if we were to break down below there, things could get rather ugly. Pay attention to the interest rate markets in the United States, because higher interest rates typically work against silver. On the other hand, we also have a huge industrial demand situation as well, so you have to pay close attention to where the economy is going, because it will directly influence the demand for silver as it is used in so many industrial applications.
At this point, I would anticipate a lot of noisy behavior, and quite frankly if I’m looking for precious metals trade, probably going to be jumping in the gold market and not the silver market, although silver can bring in quite a bit of momentum when the conditions are right.
Expect a lot of volatility, but it does look to me like there is a lot of support underneath, and therefore think you get a situation where you are probably going to see short-term buying on the dips, with a lot of resistance above at the 50-Day EMA to keep this in some type of consolidation area in a market that looks a bit confused, but it does also look a little oversold at the moment, perhaps kicking off some type of short-term recovery that shorter-term traders can take advantage of in this environment.
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Silver Continues to Grind
By: Christopher Lewis | November 10, 2023
• Silver has gone back and forth during the Friday trading session yet again, as we are trying to sort out where we are going next.
Silver Markets Technical Analysis
Silver markets have gone back and forth during the trading session on Friday, as we continue to see a lot of noisy behavior. We are close to the bottom of the bullish flag that we have been trading in for a while, therefore it makes a certain amount of sense that the market will continue to be somewhat noisy in this area, especially as silver is a typically choppy market to begin with. Because of this, it’s probably worth noting that the various issues that push silver around continue to be volatile in and of themselves.
The market continues to deal with a lot of geopolitical issues, and of course that can blow up at any time. It’ll be interesting to see what happens next in the Middle East, because so far, Israel has shown an incredible amount of restraint and for that matter, so have the Iranians. A lot of what we had seen in the precious metals markets hinged on the fear trade, meaning the people were worried that the situation in the Middle East was about to get out of control, and that of course has people looking to protect wealth.
Silver is also an industrial metal, and there are a lot of concerns out there about the potential of a significant recession coming down the road. If that’s the case, then demand should drop, but we also have to worry about the interest-rate markets at the same time. After all, if interest rates start to climb again, that is negative for silver, at least in a vacuum. With this being the case, the market looks as if we are trying to sort out what to do next, therefore I think we are in a very dangerous position. If we were to break down from here, the $22 level is the last vestiges of support. Anything below there opens up a big move lower. On the other hand, if the market were to turn around and rally from here, the 50-Day EMA would be the first target, and then after that silver could go looking to the top of the bullish flag.
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Silver Continues to Find Support
By: Christopher Lewis | November 9, 2023
• Silver markets had a rough open on Thursday but have turned around again to show signs of support at the bottom of a bullish flag.
Silver Markets Technical Analysis
Silver has kicked off the Thursday session on the downside but turned around to show signs of life again. By doing so, the market is likely to continue to see a lot of back-and-forth momentum. All things being equal, it’s very likely that we will continue to see buyers on dips, as there is so much uncertainty in the world I think that people are looking to the precious metals market for a little bit of wealth preservation. Whether or not silver is the answer remains to be seen, because silver does have several other factors come into play beyond geopolitical concerns.
To begin with, silver does tend to be sensitive to interest rates in the United States, which of course have been rather high and may stay that way for a while. Also, you have to keep in mind that if there is a recession the industrial demand for silver should drop. Just above, we have the 50-Day EMA that comes into the picture as resistance as well. After that, then you have the 200-Day EMA just above it. That being said, both of those moving averages are flat, so that tends to suggest that we don’t really have anywhere to be in the short term, just as we have not had anywhere to be for a while.
If we can break above the top of the candlestick for the trading session on Wednesday, then we can start to dig right into those moving averages. Breaking above there and then the top of the flag would be the goal for the bulls out there, and once the market does that, it’s very likely that silver could go looking to the $25 level after that.
On the other hand, if we were to turn around and break down below the lows of both Wednesday and Thursday, that could open up and move down to the $22 level. Anything below there would be very ugly for the silver market, perhaps opening up a move down to the $21 level next. I would anticipate a lot of noisy behavior, which is typical for this market to begin with so keep your position size reasonable as you navigate all of the volatility that is inherent in this market.
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Key segments of the silver market to see 42% growth through 2033 - Oxford Economics
By: Neils Christensen | November 8, 2023
Demand for silver will continue to grow for the next decade, far outpacing its growth over the last 10 years, according to the latest research from Oxford Economics.
In a research report conducted on behalf of the Silver Institute, the analysts said that three key pillars of global silver demand – industrial, jewelry and silverware – are expected to see total demand growth of 42% through 2033, "effectively double the growth rate over the previous decade, 2014-2023."
The report said that industrial demand will continue to dominate the silver market over the next 10 years with demand from the sector expected to grow by 46%. At the same time, jewelry and silverware demand are forecasted to rise by 34% and 30% respectively.
The report notes that these three segments of the silver market account for nearly three-quarters of global demand. Industrial applications alone represent more than 60% of total silver demand.
"Over the next decade, we forecast the global output of the electronics and electrical applications industry will grow by 55%," the analysts said in the report. "This is an annual average growth rate of 4.5%. The pace of growth is expected to be faster in the first five years (2023-28) compared to the second (2028-33), at an average of 5.4% versus 3.5% a year."
One interesting observation from the report is how China is expected to play a dominant role in the silver market during the next 10 years. Oxford Economics sees China leading industrial and jewelry demand over the coming decade.
"Of the forecast growth in the output of sectors that use silver for industrial purposes over the next decade, 51% is predicted to occur in China. The United States is forecast to have a 5% share in the additional output," the analysts said in the report.
Looking at jewelry demand, Oxford Economics sees rapid growth in the next five years, with China leading the world.
"Just over half of the growth in the global output of the other manufacturing sector between 2023 and 2033 is forecast to occur in China," the analysts said. "The United States is forecast to have an 8% share of the additional other manufacturing output. This suggests there will be some move in production from India to China over the next decade."
Looking at silverware manufacturing, Oxford Economics expects Asia excluding China will drive demand in the market, while India, which has dominated this segment of the silver market, will fall to second place.
"Our forecasts suggest that most of the growth in the future demand for the metal by silverware fabricators between 2023 and 2033 is likely to come from Asian countries. We expect demand from India will contribute 43% of the growth in the demand for silver to be turned into silverware. This is less than their existing share of consumption at 73%," the analysts said.
Solid demand growth for silver comes as the market is expected to see significant supply deficits in the next several years. According to the Silver Institute, the precious metal is expected to have a supply deficit of 142.1 million ounces in 2023; this follows the 2022 deficit of 237.7 million ounces.
So far, solid physical demand for silver has not done much to attract investor attention as investment demand remains fairly lackluster with prices unable to hold above $23 an ounce. Silver also continues to underperform gold as the gold/silver ratio remains relatively elevated above 85 points.
According to many analysts, silver has struggled to attract attention as it fights headwinds on two fronts. The Federal Reserve’s aggressive monetary policy continues to support the U.S. dollar and higher yields, while recession fears are weighing on potential industrial demand.
However, many analysts have said that the green energy transition driving solar demand reduces the potential impact a recession would have on silver.
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Silver Bounces After Initial Drop
By: Christopher Lewis | November 8, 2023
• Silver fell to kick off the trading session on Wednesday, only to turn around and bounce a bit by the time the Americans got on board. In doing so, it shows that the bottom of the potential bullish flag is trying to hold.
Silver Markets Technical Analysis
Silver fell to kick off the trading session on Wednesday, only to turn around and show signs of life again. By doing so, it shows that the bullish flag is trying to hold its shape, which suggests that we will continue to go to the upside. The 50-Day EMA above could be a bit of a target in the short term, as well as the top of the overall flag. I do think at this point in time we are likely to see a lot of traders jumping into the market, but if we get some type of fundamental reason for silver to take onto the upside, then it’s possible that we could see momentum picked back up. Keep in mind that the silver market is moved by quite a few external factors.
The first thing that you need to pay the most attention to is interest rates. If interest rates rally, a lot of times they work against silver. However, there are a lot of geopolitical concerns out there, and that has people looking for safety trades, and “hard assets” such as gold and silver. Finally, you also have to pay close attention to the fact that silver is an industrial metal, and therefore the global economy has a huge influence on silver as seen through the prism of demand. Because of this, silver tends to be very noisy and I don’t think that changes anytime soon with the massive amount of indecision that we see out there.
If we were to turn around and breakdown below the lows of the day and essentially the bottom of the bullish flag, then the market could test the $22 level, possibly even down to the $21 level. In that environment, I suspect that the US dollar will have spiked against almost everything, and silver would just be a victim of the greenback taking off to the upside in general. Because of this, I think you’ve got a situation where the market is going to continue to see a lot of choppy behavior and therefore you should prepare accordingly.
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Analyzing Silver’s Chart Patterns: A Bullish Outlook
By: Bruce Powers | November 6, 2023
• Silver’s price is tightly consolidated near support levels, forming a potential bullish symmetrical triangle.
Silver remains stuck inside a tightening consolidation range as it flirts with support from multiple trendlines and moving averages. Included around the two-week range are two trend lines plus the 50-Day EMA (orange) and 200-Day EMA (blue). The two-week range has been occurring around support of the 38.2% and the long-term downtrend line (thicker blue). A retracement that stops falling and turns back up around the 38.2% retracement is showing strength relative to deeper retracements.
Small Symmetrical Triangle Forms
The two-week consolidation phase takes the form of a small symmetrical triangle or pennant (purple boundary lines). Its formation follows a sharp 14.6% rally in 13 days that peaked on October 20 at a high of 23.68. The question is whether the 14.6% rally qualifies as a pole prior to the pennant/triangle consolidation phase? Generally, it doesn’t look like that sharp of a pole as we might see in other pennant setups. Nonetheless, the underlying message is similar. A breakout of the pennant/triangle is bullish and likely provides an initial signal for a continuation of the developing uptrend.
ABCD Pattern Targets 25.44
An ABCD pattern has been added to the chart showing the potential target from the pennant along with the pole (sharp rally before consolidation). With the ABCD pattern we are looking to identify when the CD leg up matches the price appreciation seen in the initial AB leg of the trend. It is interesting that if hit, the target of 25.44 would put silver above each of the next two identified target zones (red highlights).
Consolidation May Continue Through This Week
It could take a little more time before volatility picks up though and a breakout triggers. The pennant consolidation phase could continue to evolve for another couple of weeks before it is ready to break out. Although there are two points to create each boundary line the filling of the pattern is currently less than halfway towards the apex of the triangle. Nevertheless, it doesn’t have to fill more of the triangle before a breakout.
As it stands now a bullish breakout is triggered on a decisive rally above the 23.59 high from October 30. Further confirmation will then be provided on a rally above and daily close above the trend high at 23.68.
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Silver Price Forecast – Silver Looks a Bit Tired
By: Christopher Lewis | November 6, 2023
• Silver has pulled back just a bit during the early hours on Monday, as it looks like we are running into a certain amount of exhaustion.
Silver Markets Technical Analysis
Silver looks a bit tired during the day on Monday, as the markets are sitting just below the 200-Day EMA. The 200-Day EMA is an indicator that a lot of people are paying close attention to, as it has offered resistance previously. The market has broken above there a couple of times, but it almost certainly shows signs of exhaustion. Above there, the $24 level offers significant resistance, and therefore I think you need to pay close attention to it. If silver were to break above there, then it opens up the possibility of a move toward the $25.50 level.
The other scenario of course is that we go back and forth in this general vicinity, with the $22.50 level underneath being an area of general support, and therefore I think you got a situation where we can bounce back and forth trying to figure out where we are going next. That makes quite a bit of sense, due to the fact that the silver markets are being thrown around by quite a few different things at the same time.
All things being equal, silver typically moves on interest rates, the US dollar, and industrial demand. Remember, while silver does have a lot of the same moves as gold, the reality is that the silver market also has to take in a lot of industrial demand questions as well. We have a situation where the market is trying to sort out whether or not we are going to see the economy pick up or if the economy is going to slow down. However, the market is likely to see the various wars around the world right now giving you an idea of why you need to have some type of “safety trade.” While I don’t like silver as a safety trade, it does serve that purpose from time to time.
In general, I think this is a situation where we are currently trying to work off a lot of froth, which of course we saw enter the market from the massive bounce at the bottom. If we can break out to the upside, I suspect it will bring in a huge rush and a massive “FOMO trade.”
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Silver prices attract attention for all the wrong reasons as they underperform gold
By: Neils Christensen | October 31, 2023
The gold market continues to attract new attention as prices hold the line around $2,000 an ounce; at the same time, silver is starting to appear on some investors' radars, but for less bullish reasons as the precious metal continues to underperform.
The gold/silver ratio also shows that the yellow metal maintains the upper hand in the marketplace. The ratio is currently above 86 points, well off its summer lows, which means that it now takes 86 ounces of silver to equal the value of one ounce of gold. The average ratio in recent history is between 50 and 60.
Analysts have also noted that gold continues to benefit from technical momentum after breaking solidly above its 200-day moving average. Meanwhile, this resistance level has been a cap for silver. Silver's 200-day moving average is at $23.889 an ounce and some analysts have said that the metal needs to see a clear break above $24 to attract new bullish interest.
Silver is also underperforming relative to gold in the near term. December silver futures last traded at $23.010 an ounce, down more than 1% on the day, while December gold futures last traded at $1,999.60 an ounce, down 0.30% on the day.
Commodity analysts at Commerzbank said that gold is outperforming silver because the yellow metal is seen as a more vital safe-haven asset in times of geopolitical instability.
"Clearly, silver is not profiting from the demand for safe havens to the same extent as gold," the analysts said in a note on Tuesday. "Industrial use accounts for somewhat more than 50% of total silver demand. As a result, the silver price tends to perform less well than the gold price at times of increased risk aversion and associated economic concerns."
Some economists have warned that Russia's ongoing invasion of Ukraine, coupled with renewed chaos in the Middle East from Israel's war with Hamas, will further strain the global economy.
Rhona O'Connell, head of market analysis at the StoneX Group, also said in her last market commentary that silver's industrial component could be holding back the precious metal.
O'Connell noted that silver's underperformance highlights risks for the gold market as well.
"Silver's reluctance to move underscores the fact that while investors are hedging against risk, the momentum to take gold into a new higher range is still not there, or silver would be more aggressively bullish," she said.
While safe-haven demand has provided solid support for both gold and silver, analysts note that the fundamental economic backdrop has not changed.
Although the Federal Reserve is expected to hold interest rates unchanged on Wednesday, the central bank is still expected to maintain its restrictive monetary policy for the foreseeable future. Some commodity analysts have noted that this continues to support a stronger U.S. dollar and higher bond yields, two significant headwinds for gold and silver.
While silver's momentum appears to be capped, some investors have said that it still remains an important value asset to watch. Some analysts have said that the green energy transition and exponential growth in solar energy continue to drive industrial demand for silver even as supply dwindles.
Analysts have said that this significant supply and demand imbalance supports a long-term uptrend in silver.
"While it remains a long way short of its all-time high (just below $50 in 2011), the metal is showing signs of life," said David Morrison, senior market analyst at Trade Nation. "It has just broken back above an upward-sloping trendline linking a succession of lows beginning in August last year. Back then, silver was trading below $18 per ounce and it's now 32% higher. One worth keeping an eye on."
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Silver Continues to Hang on to the 200-day EMA
By: Christopher Lewis | October 31, 2023
• The silver market has gone back and forth during the early hours on Tuesday, as we are sitting just above the 200-Day EMA.
Silver Markets Technical Analysis
Silver has gone back and forth during the course of the trading session on Tuesday, as we are sitting just above the 200-Day EMA. This obviously is an indicator that a lot of people will pay close attention to, and therefore it’s likely that we would see a lot of volatility in this area. The market is sitting at the top of a bullish flag, which of course is a pattern that a lot of people will be paying attention to. Furthermore, we can break above the top of the shooting star from the Monday session, it could open up a move to the $24 level.
Breaking above the $24 level opens up the possibility of a move to the $25.50 level. This of course was a major high that we have had a couple of times in the past, and it is probably worth noting that the “measured move” of the bullish flag suggests that we could very well get there. Furthermore, we also have the 50-Day EMA sitting just below the 200-Day EMA, so I do think that there is a significant chance that short-term pullbacks continue to offer buying opportunities.
In general, I think this is a market that will continue to pay close attention to interest rates, and of course the US dollar. However, what is probably driving the market at this point is the war in the Middle East more than anything else. People are using silver as a way to find a little bit of safety, which is somewhat ironic considering that silver is an extraordinarily volatile market.
However, precious metals do tend to get hoarded in times of uncertainty, and it seems like the silver market is trading more on the precious metal side of the equation rather than the industrial one. Remember, there is a certain amount of noise coming from the demand for silver by industry, which sooner or later will be a factor again, but right now it seems to be all about trying to find some type of wealth preservation vehicle, which people are using silver for. With that in mind, I think you will continue to buy dips.
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Silver’s Resurgence: Breaking Barriers, Aiming for 78.6% Fibonacci Level
By: Bruce Powers | October 30, 2023
• Silver’s recent surge above its 200-Day EMA and a successful intraday breakout signal a strong uptrend in the making.
Silver rallied back above its 200-Day EMA today after trading largely below it for the past four days. Today’s bullish price action started with an inside day breakout that saw silver reach a high of 23.59 as it looks to test the recent trend high of 23.68. A continuation of the uptrend should be next with a rally above that prior trend high.
Strong Close Will Confirm Strength
This is the first day since a minor correction began following the 23.68 peak that silver is showing strength that should lead to a new trend high. Further, it is on track to confirm strength today with the highest daily close since the October bottom. The highest daily close for the rally is from October 20 at 23.29. Also, the weekly chart confirms strength. Today’s advance triggered an upside breakout of an inside week as well as an inside day. Last week’s high was 23.32.
78.6% Fibonacci retracement at 24.07 is Next in Line
The next higher target for silver looks to be around the 78.6% Fibonacci retracement at 24.07. For the remainder of this week, the 78.6% retracement level converges around the higher declining channel line (orange dash). A daily close above the top line will provide a new sign of strength as silver needs to first break out of the declining trend channel before it can get higher.
Two Higher Target Zones Prior to New Highs
Subsequently, there are two initial target zones on the way up. Each is anchored by swing highs and lows, which match weekly highs and lows. The first is identified from around 24.47 to 24.62. It includes the 23.6% Fibonacci retracement at 24.56. Next higher is a range from around 25.0 to 25.25. A daily close above 25.25 completes a reversal off the bottom as the two swing highs that make up the declining trend channel will be exceeded to the upside. That higher range creates a vertical resistance zone that is more powerful when broken relative and the breakout of an angled line.
Silver Back Above Long Term Trendline
You can see how the long-term downtrend line (thicker blue) cuts through the middle of the multi month consolidation phase of the last few months. An initial upside breakout above the line first triggered on April 4. Subsequently, overhead supply picked up leading to a correction that likely bottomed out this month. The current rally should be more successful in rising above the long-term trendline and continuing higher.
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Silver Gaps Higher to Kick Off the Week
By: Christopher Lewis | October 30, 2023
• Silver gapped to the upside during the trading session on Monday, breaking above the 200-Day EMA.
Silver Markets Technical Analysis
Silver has gapped higher to kick off the trading session on Monday, showing signs of bullish pressure yet again. At this point, it will be interesting to see if we can reach the recent swing high at the $24 level, but it certainly looks like we are going to try to do so. If we can break above the $24 level, it’s likely that silver will go much, much higher.
With that in mind, I would be a bit hesitant to get overly aggressive in this market, because it is moving solely on a motion at the moment. A short-term pullback does make a certain amount of sense as the futures markets tend to fill gaps given enough time, which also would coincide with testing the 50-Day EMA.
Ultimately, it does look like we are trying to form some type of bullish flag, but we will wait and see whether or not it actually breaks out. Yes, it’s almost impossible to short this market, but if we were to break down below the bottom of the Thursday candlestick, then smashing through that hammer would open up quite a bit of selling pressure, perhaps sending silver down to the $22 level.
Keep in mind that the silver market is likely to see a lot of volatility as traders start to look at it through a potential safety trade as the noise in the Middle East is certainly going to have traders looking for safety. However, you also need to pay attention to the fact that interest rates are very high at the moment, so that does somewhat tamper down the enthusiasm for precious metals. Another thing to think about is that silver is an industrial metal as well as a precious one, so it does pay close attention to the overall industrial demand.
I suspect that silver is going to continue to be very noisy, and you do need to be very cautious with your position sizing. At this point, it looks like the market is more likely to go higher than it is to go lower, but caution is going to be necessary when trading the silver market at this point.
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Where oh where is the giant short in silver hiding that will be part of the supposed #silversqueeze?
By: Markets & Mayhem | October 26, 2023
• Where oh where is the giant short in silver hiding that will be part of the supposed #silversqueeze?
Managed money and dealers are basically flat
Even producers haven't sold forward that much production
Seems pretty neutral to me
What am I missing here?
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Silver Continues to Chop
By: Christopher Lewis | October 26, 2023
• Silver markets have been rather noisy again during the day on Thursday, as we continue to hang around the 50-Day EMA.
Silver Markets Technical Analysis
Silver has rallied slightly during the trading session on Thursday, as we continue to see a lot of noisy behavior in general. Ultimately, I think this is a market that will continue to hang around this area and digest the previous bullish pressure, as the market has gotten too far ahead of itself at one point. With this, I think it’s probably only a matter of time before the market has to make a bigger decision, but right now we need to work through some of this massive momentum.
The 50-Day EMA is in the same neighborhood as we are right now, and then of course we have the 200-Day EMA doing the same thing. Looking at these moving averages, they are flat, and it does suggest that perhaps we have nowhere to be. All things being equal, the market is likely to continue to see this area as difficult to break above, but if we can finally break above those moving averages to go looking toward the $24 level. The $24 level opens up a bigger move, perhaps moving to the $25 level.
If we turn around and break down below the lows the last couple of days, the market could go down to the $22 level. All things being equal, the market is likely to pull back occasionally, but at the end of the day we still have seen a lot of upward pressure. Furthermore, there is the geopolitical noise out there that continues to have people looking for safe haven assets, and while silver plays 2nd fiddle to its cousin gold, it does have a little bit of that going for it.
Ultimately, I do think that you are going to have a lot of noisy trading, and at this point I think we’ve got a situation where we will more likely than not continue to have to be very cautious with their position sizing. That being said, as I look at this chart, it’s possible that we could see a little bit of a bullish flag trying to form itself as well. In other words, I think we are getting ready to see a big move, but you are better off waiting for some type of momentum to present itself before following.
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Silver Continues to Hang Around the 50-Day EMA
By: Christopher Lewis | October 25, 2023
• Silver continues to see noisy behavior right around the 50-Day EMA, which of course is a widely followed technical indicator.
Silver Markets Technical Analysis
Silver has gone back and forth during the course of the trading session on Wednesday, as we continue to hang around the 50-Day EMA. The 50-Day EMA of course is an indicator that a lot of people will pay close attention to. With this, you get a situation where market participants will acknowledge it and have to make a decision on whether or not to react. If we can break above the 200-Day EMA, the market is likely to continue to reach toward the $24 level. On the other hand, if we break down below the $22.50 level, then you have a situation where $22 could be targeted.
In general, this is a market that I think continues to see a lot of noisy behavior, and with that being the case it’s likely we will see a lot of volatility. However, it’s probably worth noting that silver is highly sensitive to risk appetite and of course the bond markets in general. With this being the case, you need to understand that the 10 year yield is something that you need to be very cognizant of.
Furthermore, silver has a certain amount of industrial demand in its pricing as well, as it is also an industrial metal. It’s not just a matter of “dollar up, silver down, and vice versa”, there are a lot of other external factors as well. That being said, it’s probably worth noting that we had rallied quite drastically, and now are at the very least going to be trying to work off that excess bullish behavior, and now it comes down to a question of whether or not we are going to consolidate, or if we are going to pull back. At this point, it looks more likely than not that we are going to see a little bit of a drop but I also recognize that there was so much in the way of bullish pressure that it is not necessarily going to be easy to short this market. In other words, I think it’s probably more likely this ends up being a correction more than anything else. Expect volatility, and keep your position size reasonable.
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Silver Drops on Tuesday
By: Christopher Lewis | October 24, 2023
• Silver fell a bit during the trading session on Tuesday, as the market is finally starting to recognize gravity.
Silver Markets Technical Analysis
Silver had initially tried to rally during the trading session on Tuesday but found enough resistance early during the session to turn things around and show negativity. The 200-Day EMA and the 50-Day EMA indicators are sitting in that general vicinity, and therefore it does suggest that there’s a lot of technical resistance in this area. Furthermore, we have seen a lot of noise here recently as well, so it all comes together for some type of pullback. That being said, the market is eventually going to have to come to grips with the idea of higher or lower interest rates, and therefore we will continue to see a lot of noise coming out of the bond market.
Furthermore, you have to keep in mind that silver has a lot of noisy behavior, under the best of circumstances. At this point, the market is very likely to continue to be noisy due to the fact that we are not sure whether or not the bond market is over, and then of course the idea that industrial demand is going to be a question as well. Remember, silver is beyond just being a precious metal, it also has major industrial uses, so it has a lot of different things going on at the same time. Furthermore, you also to pay attention to the fact that some people will be running toward precious metals in the geopolitical environment that we have at the moment, which does offer a lot of things to be concerned about.
Ultimately, bond markets also have something to say as well, as the higher the interest rates in the United States, typically the worse the silver market ends up doing. Ultimately, you need to be very cautious with your position sizing, but it certainly looks like a pullback could be coming. The market got up to this area rather quickly, so a little bit of a pullback does make a certain amount of sense, although it doesn’t necessarily mean that we are going to fall apart at this point. Quite frankly, gravity coming back into the picture makes quite a bit of sense after the monster run we had seen previously.
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Silver’s Bullish Momentum: Potential Breakout and Price Targets
By: Bruce Powers | October 23, 2023
• Silver takes a breather after a strong week but shows potential for a bullish breakout above key levels, setting the stage for further gains.
Following a 2.9% advance last week silver takes a rest and trades inside day today, Monday. Silver advanced to a high of 23.68 last week, as it tested resistance around the September 22 swing high of 23.76. However, last week’s high was quickly met with resistance, driving silver down to close in the lower half of Friday’s trading range. The week remains bullish with a close for the week above the middle of the range at 23.02.
Silver Resting as it Prepares to Continue Higher
Silver is sitting in a healthy position that could lead to a continuation higher. It is sitting around support of both the 50-Day EMA (22.80) and the 200-Day EMA (23.03), plus the long-term downtrend line around 22.78. Note that the downtrend line goes through the middle of recent consolidating price action.
Inside Day Breakout Used by Aggressive Traders
Aggressive traders sometimes use a breakout of an inside day for a signal. For silver, starting in Tuesday’s trading session, an inside day bullish breakout occurs on a rise above today’s high of 23.32. Silver then needs to get over last week’s high before it targets the next higher price zone around the 78.6% Fibonacci retracement at 24.07. If reached, silver would be clearly above the interim swing high of 23.76, which will provide an additional piece of evidence supporting a bullish move.
Daily Close Above 23.76 Points Higher
A daily close above the 23.76 swing high will provide a new level of confidence for the rising trend as the downtrend price structure will be violated at that point showing additional signs of strength. The next two higher key price levels will then be the two swing highs at 25.0 and 25.25, respectively. A daily close the higher price level frees silver to continue higher. Certainly, a test and likely breakout above the May 5 swing high at 26.12 will be in the works if silver can first close above 25.25.
Bigger Picture Remains Bullish
Since hitting the 26.12 swing high silver has been consolidating in a wide downward sloping trend channel. Once it comes out of the consolidation range it has a chance to accelerate its price appreciation. Before a larger declining consolidation range, starting from the February 2021 trend high, silver had advanced by 165.8% in only 20 weeks. Similar enthusiasm from buyers may be seen again once silver clears above the 26.12 swing high.
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Silver Continues to Show Volatility
By: Christopher Lewis | October 23, 2023
• Silver fell significantly during the trading session on Monday but continues to find buyers on dips. The question now is whether or not we are going to make a big move higher, or if we are going to fall back down?
Silver Markets Technical Analysis
Silver fell quite a bit during the trading session on Monday, as we broke below the 50-Day EMA, only to turn around and show signs of life. Ultimately, I think this is a market that will continue to see a lot of noise, which is typical for silver anyway, due to the fact that it is moved around by so many different external factors. Silver of course is sensitive to the US dollar, as the contract is priced in that currency.
It’s also very sensitive to interest rates because if they start to rise again in the United States, that can work against silver. However, it’s also worth noting that the market is sometimes used as a safety trade, and the recent geopolitical turmoil that we have seen in the Middle East has helped precious metals in general. Furthermore, silver is an industrial metal, so that causes a lot of headaches for traders as well.
It’s worth noting that we bounced from the 50-Day EMA, which of course is a major technical indicator, and a lot of people will have been paying close attention to it. The 200-Day EMA is in the same neighborhood as well, although it’s probably worth noting that both of these indicators are relatively flat and have been sliced through a couple of times over the last 2 weeks. Because of this, it shows that the market has no idea what to do with itself and it’s probably worth noting that we had shot straight up in the air and it’s only a matter of time before we see exhaustion come into the market.
If we can break above the $24 level, then the futures market will almost certainly drag silver higher, perhaps opening up a move all the way to the $25.50 level. That would obviously involve a bit of a panic trade, and right now I think we are more likely than not to see a lot of noise over the next few days, so pay close attention to these levels for guidance as to where the market may go.
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Silver Prices Forecast: Bullish Wave Amid Geopolitical Strife, Short-Covering
By: James Hyerczyk | October 22, 2023
• XAG/USD rises amid Middle East tension, showcasing trading divergence; rally fueled by short-covering, polarizing small and big traders’ stance.
Highlights
• Large traders short, eyeing Fed policy and strong dollar.
• Small traders long, betting on worsening Israel-Hamas crisis.
• COT data reveals stark divergence in trading stances.
• Fed’s stance and rising yields may cap silver gains.
Silver’s Upward Momentum: A Short-Covering Rally Unfolds
Silver (XAG/USD) prices are rising amid escalating Middle East tensions, as small traders take long positions, betting on the crisis to worsen. However, big traders, eyeing potential Fed policy shifts, higher interest rates, and a robust dollar, are largely short. This polarity primes the market for a short-covering rally, which could further propel silver prices.
Middle East Crisis Amplifies Silver’s Safe-Haven Appeal
The Middle East discord has amplified silver’s safe-haven appeal, with both spot and U.S. December Comex silver futures climbing. Yet, beneath this bullish veneer lies a market largely propelled by short-covering rather than new buying, as suggested by recent CFTC data and daily chart patterns.
Market Dynamics and Commitment of Traders Analysis
The CFTC report unveils a clear divergence in trading positions amid escalating Middle East tensions. Small traders are leaning long, possibly spurred by geopolitical unrest, while big traders are short, likely eyeing a strong dollar and higher interest rates from looming Fed actions.
The Commitment of Traders (COT) data, dated 10/17/23, accentuates this divide, indicating a market ripe for a short-covering rally should prices surge. Essentially, small traders are betting on a rally fueled by Middle East issues, while big traders, anticipating different economic outcomes, are positioned oppositely, setting a complex stage for potential market movements.
Global Economic Influence
Fed Chair Jerome Powell’s hints at possible rate hikes, coupled with a sturdy US dollar and escalating Treasury yields, add new layers to silver’s price dynamics, possibly limiting its upside. These elements, intertwined with the broader economic landscape, play a significant role in shaping silver’s market trajectory, emphasizing the multi-faceted influences on its pricing amidst the unfolding geopolitical and economic scenarios.
Short-Term Forecast
The short-term forecast for silver remains bullish, spurred by Middle East turmoil. However, it’s tinged with speculation, hinting at a potential pullback if tensions ease. This rally underscores the necessity for keen market analysis amidst volatile geopolitical and economic conditions.
The outlook is also influenced by a stronger dollar, rising Treasury yields, and a hawkish Federal Reserve stance, which traditionally curb silver’s gains. These economic factors, alongside geopolitical events, are pivotal for traders to consider when navigating the silver market.
This scenario underscores silver’s role as a geopolitical tension gauge, reflecting the nuanced dynamics affecting market sentiment in the silver trading sector.
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Silver Hangs Around the 50-Week EMA
By: Christopher Lewis | October 20, 2023
• The silver market has been rather volatile over the course of the week yet again as we are hanging around the 50-Week EMA.
Silver Weekly Technical Analysis
Silver has gone back and forth during the course of the trading week, as we are hanging around the 50-Week EMA. Silver of course is very volatile under the best of circumstances, so you need to realize that you have to be very cautious with your position sizing. All things being equal, silver has several different factors that come into play, not the least of which will be interest rates in the United States and the safety trade. While silver is not necessarily the first place traders go to when it comes to a safety trade in comparison to gold, the reality is that silver does carry some of that.
Furthermore, you need to keep in mind that silver is also an industrial metal, so part of the allure of owning silver might be due to the fact that the global economy continues to strengthen. That being said, we are now in the midst of a lot of noise, and silver looks like it is a little overdone. The $24 level above will be a bit of a barrier, just as the $23 level underneath will be supported.
I suspect that we get a little bit of a pullback, but whether or not it breaks down remains to be seen. If we were to break above the $24 level, then it’s likely that silver goes looking to the $25 level. The $25 level of course is an area that will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure and an area that would obviously be widely reported.
Pay attention to the US dollar and pay attention to interest rates in America because if both of those start to rally, it’s very likely that it will work against silver in general.
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Silver $SLV - May opt to plot a RS for the Lrgr 'Inv H&S' Plot tho...
By: Sahara | October 20, 2023
• $SILVER $SLV - May opt to plot a RS for the Lrgr 'Inv H&S' Plot tho...
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Silver Continues to Struggle
By: Christopher Lewis | October 19, 2023
• Silver continues to struggle in general, as it looks like we are going to continue to see a lot of volatility.
Silver Markets Technical Analysis
The silver market has initially tried to rally during the trading session on Thursday, but it looks like we are struggling with the idea of breaking above the 200-Day EMA. The silver market has been very noisy, but I think given enough time we need to look at this through the prism of whether or not the US dollar starts to pick up strength, or whether or not we see the US dollar fall, perhaps helping propel silver higher. Remember, silver is not just a precious metal, but it is also an industrial one as well. In other words, we need to look at this through the prism of whether or not we are going to see more of a risk on attitude or not.
Keep in mind that silver is also a precious metal, although it has a lot more in the way of noise when it comes to whether or not we are going to continue seeing a lot of volatility which of course is difficult to deal with when it comes to silver, as it is such a difficult market at times. If we can break above the shooting star from the trading session on Wednesday, then silver is likely to go looking toward the $24 level. However, this is a market that has been a little overdone recently, so I think at the very least, pullback makes quite a bit of sense.
If we break down below the $22.50 level, then the market is likely to go much lower, perhaps reaching down to the $22 level. The $22 level of course is a large, round, psychologically significant figure, in an area where we have seen the light of bullish pressure at. If we were to break down below there, then the market is likely to continue to go down to the $21 level.
On the other hand, if we turn around and break above the top of the shooting star from the previous session, then we could go look into the $24 level, but I think that would take an extraordinarily large amount of effort. In other words, ultimately this is a market that I think continues to draw from here.
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Silver Market Update - TINY DOWNSIDE, HUGE UPSIDE...
By: Clive Maund | October 18, 2023
At this point, given what is going on in the world, silver is regarded as probably the best value investment around with very little downside and huge upside. It is still significantly undervalued relative to gold, which reflects the recent negative sentiment towards the Precious Metals sector that is characteristic of a bottom. The recent weakness across the sector has been due to a combination of a relatively strong dollar – it has been strong relative to other currencies but intrinsically weak – and rising interest rates. However, the rise in interest rates has been due to the gathering meltdown in the debt market which the Fed and other Central Banks are trying to stave off by means of creating trillions of extra dollars or other currencies, a course of action that will lead to hyperinflation that will in turn trigger a torrent of funds seeking safe haven to flood into the Precious Metals whose finite supply will result in a sector bullmarket of unprecedented proportions. Now to review the charts
We start with the 20-year chart which is most interesting and useful as it shows the great 2000’s bullmarket that culminated in a terminal blowoff spike into a high in May of 2011. This was followed by a quite severe bearmarket that ended with the giant Double Bottom that formed between 2015 and 2020, and we can ignore the freak Covid Crash drop in the Spring of 2020 which turned out to be a fooler move or “head fake”. After this deceptive false breakdown silver broke out of its Double Bottom and rocketed higher in 2020, a move that is regarded as the 1st upleg of a major new bullmarket. This being so, the reaction from mid-2020 through to the present is thought to be a giant bull Pennant and if this is indeed the case – and it seems like a reasonable presumption given the extraordinary developments that are now unfolding – before too long we should see another powerful upleg that will be confirmed by a break above the resistance at the key $30 level, an event that will be expected to trigger a powerful advance that could be of unprecedented proportions. Before leaving this chart we should note that the overall positive divergence of the Accumulation line makes this scenario all the more likely.
On the 5-year chart we can see recent action in much more detail. Following the Covid Crash false breakdown in the Spring of 2020 silver rocketed higher breaking clear out of the Double Bottom base pattern that we looked at on the 20-year chart but since mid-2020 it has run off sideways / down marking out what is believed to be a giant Bull Flag and the reason it has been doing this is that it has been “marking time” during an unfavorable period for the metals due to an advancing dollar index and rising interest rates but as mentioned above the extraordinary measures being undertaken to maintain liquidity and prevent a systemic lockup, namely vast amounts of new money creation using any excuse, the latest being war, guarantee a rapid trend into hyperinflation that must of necessity inflate the price of all assets with intrinsic value, including and especially the Precious Metals. Right now the price is about in the middle of the bull Flag and so silver and all things silver are viewed as most attractive here and we watch first for an upside breakout from the Flag and then for the price to break above the key resistance shown approaching and at $30. Once it gets above $30, silver is likely to take off like a rocket.
While the 6-month chart is of limited use technically it does enable us to see in detail what has been happening in the recent past. The sudden break lower late last month and early this month is viewed as a “head fake” meaning a false move and as a “bear trap” and on the 5-year chart it certainly looks like no big deal, and this break lower has been followed by a reversal and recovery in recent days.
Whilst we cannot rule out minor short-term weakness occasioned by further dollar gains and rising rates, overall this looks an excellent time for investors to busy themselves accumulating all things silver while they still can – silver ingots, coins, the better silver stocks and you can even enjoy it by becoming “a silver buff” by buying such things as silver pendants and rings, and while this may seem to some a little cranky, they won’t find you so eccentric when their fiat buys them nothing and you can exchange items in your collection for things that you might require in the future, like food.
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Silver Breaks Above the 200-Day EMA
By: Christopher Lewis | October 18, 2023
• The silver market rose higher during the course of the trading session on Wednesday, breaking above the 200-Day EMA.
Silver Markets Technical Analysis
Silver has broken higher during the trading session on Wednesday, breaking above the 200-Day EMA in a significant surge higher. Breaking above the 200-Day EMA opens up the possibility of a move to the $24 level, however it’s also worth noting that silver is extraordinarily volatile, and it has stretched itself quite far. Ultimately, the market is probably going to run into a bit of noise between now and $24, but it certainly looks as if the buyers are going to do everything they can to push higher.
The US dollar of course does have a negative correlation to the silver market, but lately it seems to be more or less an argument for safety. We have seen gold move higher as well, so it looks like people are trying to do everything they can to get away from any type of danger. The $22.50 level underneath is a significant support level, as it was previously shown to be. Ultimately, this is a market that has a lot of volatility just waiting to happen, and the fact that we have rallied this quickly tells me that the market still has a lot of indecision as we have done a complete round trip in a relatively short amount of time. While we did have a vicious rally, the reality is that we are now getting overdone, so it’s possible that we get a pullback.
Interest rates rising typically works against sellers, but the last couple of days have been a bit different. These negative correlations come and go at times, so pay attention to the price action more than anything else. However, silver also has the industrial component that it needs to pay close attention to, and one would have to wonder whether or not that is going to continue to help. That being said, it appears that the US economy is not slowing down, and if that’s going to be the case, demand for silver may pick up just due to the industrial component. The size of the candlestick is rather impressive, so one would assume that there’s going to be a bit of follow-through to the upside from here.
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Silver $SLV - Watching for an 'Inv H&S' here too...
By: Sahara | October 18, 2023
• $SILVER $SLV - Watching for an 'Inv H&S' here too...
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Silver Continues to Consolidate
By: Christopher Lewis | October 17, 2023
• Silver initially pulled back during the early hours on Tuesday, only to turn around and show signs of life again.
Silver Markets Technical Analysis
Silver has initially fallen during the trading session on Tuesday in the early hours, but only to turn around and show signs of life. Ultimately, this is a market that I think is going to have to sort itself out, and it is probably worth noting that we are at a previous major support level, and a certain amount of “market memory” could come into the picture. If we were to break down below the lows of the last 48 hours, then I suspect that the market drops back down to the $22 level. On the other hand, if we were to break above the 50-Day EMA, then the market is likely to go much higher, perhaps reaching toward a $24 level.
Silver of course is reacting to the bond markets, and the higher interest rates in the United States. The situation with silver is a little bit more complex than gold, due to the fact that the silver market also has to keep in the back of its mind the value of its industrial use. After all, we do see industrial demand pickup, that can override a lot of noise coming out of the bond market, the US dollar, and many other influences. Furthermore, we have geopolitical concerns, and although silver takes a second seat to gold, it is still considered to be a precious metal. In other words, there’s a lot of noise just waiting to happen in this chart.
It is worth noting that the market shot straight up in the air last Friday, so now the question is whether or not the market will be digesting the gains for a couple of days, or if we get a complete turnaround? The market breaking down would not be the craziest of ideas, due to the fact that this is an area that’s been so important, and of course the 50-Day EMA will attract a certain amount of attention in and of itself. However, after a move like we had on Friday, one would have to believe that there is a certain amount of buying pressure just waiting to get involved, so we could have a very explosive move once it finally does kick off.
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Silver $SLV - If it can get clear of the Dotted-Grey & Blue-Buffer. It has the Alt-Channel Line & Purple to deal with...
By: Sahara | October 17, 2023
• $SILVER $SLV - If it can get clear of the Dotted-Grey & Blue-Buffer. It has the Alt-Channel Line & Purple to deal with...
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Bullish Momentum in Silver Signals Higher Price Targets
By: Bruce Powers | October 16, 2023
• Silver’s recent resistance at $22.80 and multiple trendline convergences point to renewed enthusiasm from buyers as demand improves. Watching for advance above last week’s high.
Silver found resistance last week at a high of 22.80 on Friday. That high marks a test of the long-term downtrend line (blue) as resistance and it held, leading to a bearish intraday reversal. Today, silver consolidates as it trades inside day. Further, last week’s high was also at the convergence of two shorter trendlines, one rising from the September swing low and the second, declining from the August 30 swing high.
Bullish on Both Daily and Weekly Charts
Both the daily and weekly time frame charts show bullish indications for silver. Silver has been advancing in a clear uptrend on its daily chart from its recent swing low of 20.67 hit two weeks ago. Further, last week triggered a bullish reversal on the weekly chart as a bullish hammer candlestick pattern triggered a breakout on a move above the previous week’s high of 22.18.
Multiple Resistance Indications Point to Same Price Zone
Note how last week’s high resistance matches the crossover of the three trendlines referenced above. A decisive breakout above last week’s high will have silver next testing resistance of the 200-Day EMA, currently at 22.59. Once a daily close occurs above the 200-Day line, then silver will have reclaimed all three trendlines, including the more significant long term downtrend line, and the important 200-Day EMA. That should clear it for a continuation higher.
Further signs of strength will then be confirmed on a rally above the interim swing high of 23.76. That should be followed by an advance above the top dashed orange channel line, and then the swing high of 25.00 from August 30. These additional signs of strength should eventually lead to silver testing prior swing highs of 26.12 and 26.93 on its way to still higher prices.
Inside Day for Aggressive Traders
Aggressive traders may use the inside day as a bullish signal rather than waiting for a move to new trend highs. In that case, a decisive breakout above today’s high of 22.71. Given the positioning of today’s inside day near the high of the trend and its narrow range, an upside breakout should show aggressiveness relatively quickly. Subsequently, a drop below today’s low of 22.46 points to a failure of the bullish breakout.
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$SIL $SILVER #Miners - Update: Nearing the 1st Target...
By: Sahara | October 16, 2023
• $SIL $SILVER #Miners - Update
Nearing the 1st Target...
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Silver $SLV - Some follow thru from that Wkly 'Hammer' at the Purple/MA. Slammed against the B/Down Line & Grey 100/MA...
By: Sahara | October 16, 2023
• $SILVER $SLV - Some follow thru from that Wkly 'Hammer' at the Purple/MA.
Slammed against the B/Down Line & Grey 100/MA...
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Silver Pulls Back Slightly
By: Christopher Lewis | October 16, 2023
• Silver pulled back slightly during the trading session on Monday, as the 50-Day EMA seems to be offering a bit of resistance.
Silver Markets Technical Analysis
Silver pulled back slightly during the trading session on Monday, as the 50-Day EMA has come into the picture. Ultimately, the market looks as if it is trying to get down toward the $22.50 level again in order to see whether or not it holds as support. I believe that the next couple of days will be crucial for the silver market, and probably the markets in general. This has been one massive move on Friday, so one would assume that there’s probably some type of follow-through coming. Because of this, I am a bit cautious, but I also recognize that there are a couple of technical indicators just above that could come into the picture as well.
The 200-Day EMA sits above the $23 level, so we can see that it opens up the possibility of a move to the $24 level. The $24 level is an area that recently has seen a lot of selling pressure as well. In other words, there’s a lot of noise that the market needs to get beyond, and therefore I think we have to look at this through the prism of whether or not we can build up the necessary momentum.
Pay close attention to the US dollar, because the silver market is highly sensitive to the greenback, and of course interest rates. Furthermore, the silver market is also sensitive to the idea of industrial demand, so we also have to look at the world through the prism of whether or not there is going to be demand for base metals.
Under the best of circumstances, silver is very noisy. These aren’t the best of circumstances, so it’s going to be even worse. If we can break above the 200-Day EMA, then the market could challenge that $24 level. On the other hand, if we break down below the $22 level, then it opens up a new flood of selling pressure. I suspect that in the next couple of trading sessions, we will probably see a lot of noisy and choppy consolidation. Because of this, position sizing will be crucial for your survival when it comes to this type of volatility.
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Silver Slams Into Resistance
By: Christopher Lewis | October 13, 2023
• Silver has rallied significantly to slam into previous support, which is now offering resistance.
Silver Markets Technical Analysis
Silver has rallied rather strongly during the trading session on Friday, as we have reached a previous support level. This should allow the market to find a bit of resistance, so we’ll have to wait and see whether or not it pulls back. If it does, that could be a sign that we have completely ran the course of the recovery, and could start to fall at this point. If that is in fact going to be the case, the $22 level would be targeted rather quickly in my estimation. That being said, you should also keep in mind that silver is an extraordinarily volatile instrument, so you need to be very cautious with your position sizing.
When you look at this chart, you can see clearly that the area that the market approached early in the United States trading session is an area that previously had been massive support. It should now have a certain amount of “market memory” attached to it, therefore I think it’s quite interesting to see what it does next. If it does in fact start to fall from here, then it’s likely that we continue the overall downtrend.
On the other hand, if we were to break above the $22.60 level in the futures market, that opens up the possibility of silver recovering completely. There are a couple of moving averages above there, including the 50-Day EMA, and the 200-Day EMA indicators. These of course are important, and a lot of people will pay close attention to them as potential resistance. That being said, anything above there opens up the possibility of the market going much, much higher, perhaps reaching the $25 level in time.
I do think that the one thing you can count on is a lot of volatility, and therefore you need to be cautious with their position sizing and only add to positions that are working out in your favor instead of trying to “front run the move.” Silver typically moves in the opposite direction of interest rates and the US dollar, but those correlations do break down from time to time. Ultimately, this is a very strong candlestick, but one has to wonder whether or not there is enough momentum to keep it going?
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Silver $SLV - Thus far a long wick, and gives us an 'Inv H&S' Plot around that MA...
By: Sahara | October 13, 2023
• $SILVER $SLV - Tapped & Turned again yet needs to hold over that Mthly Dotted-Grey.
Thus far a long wick, and gives us an 'Inv H&S' Plot around that MA...
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Silver $SLV - After reaching & Exceeding my 'Pennant' Target is now oscillating betwixt the 2Hr Lime/Blue MA's...
By: Sahara | October 13, 2023
• $SILVER $SLV - After reaching & Exceeding my 'Pennant' Target is now oscillating betwixt the 2Hr Lime/Blue MA's...
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Silver Gives Up Early Gain
By: Christopher Lewis | October 12, 2023
• Silver initially tried to rally during the trading session on Thursday but gave back gains after the CPI numbers came out hotter than anticipated.
Silver Markets Technical Analysis
Silver started to rally early during the trading session on Thursday, but found a little bit of resistance above, which makes quite a bit of sense from a technical analysis standpoint, as we are approaching the crucial $22.50 region. Furthermore, the CPI number came out quite a bit hotter than anticipated in the United States, and it does suggest that perhaps the Federal Reserve will have to stay tighter for longer. This is what they’ve been saying all along, but occasionally Wall Street and other places like Canary Wharf need to be reminded of this.
Underneath, I see the $22 level as a significant support level, and therefore, I think you have a situation where the market is going to probably see some buyers stepping in for that reason. If we break down below the $22 level, then it’s likely that we drop down to the $21 level which is where we had bounced from to begin with. Ultimately, the market certainly has had a nice rally, but after that massive selloff it had previously, one would assume that sooner or later the sellers reappear. That being said, if we were to take out the $22 level, then we might have the possibility of the market going higher. The 50-Day EMA is just above there and waiting to cause some issues as well. I think it is only a matter of time before the sellers overtake, but if we were to go beyond the 50-Day EMA, then it does open up the possibility of a complete reversal. Having said that, I would not hold my breath.
The US dollar of course has a negative correlation to silver, and we also have the interest rates in America causing downward pressure on silver as well. With this, I think it’s probably only a matter of time before we revisit those lower levels. If we give up $21 to the downside, that could be really ugly, perhaps sending the market all the way down to the $20 level. Regardless, I think we have a lot of choppy volatility to deal with, so make sure you are reasonable with your position size as silver can be quite expensive if you are wrong.
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$SILJ $SILVER #Miners - Recovered the Bull 'Wedge'. Now has to hold it...
By: Sahara | October 12, 2023
• $SILJ $SILVER #Miners - Recovered the Bull 'Wedge'.
Now has to hold it...
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Silver eyes breakout, buoyed by safe-haven bid and dovish Fed speak - FX Empire's Hyerczyck
By: Ernest Hoffman | October 11, 2023
The safe-haven bid driven by the Israel-Hamas conflict and dovish comments from Federal Reserve officials are combining to support silver prices, which could soon breach key levels and spark a breakout, according to James Hyerczyck, Senior Market Strategist at FX Empire.
“On Wednesday, spot silver (XAG/USD) is holding its ground at $21.88 per ounce,” noted Hyerczyck. “This balance is influenced by contrasting winds: dovish undertones from Federal Reserve officials have weakened the dollar, while geopolitical tensions involving Israel and Hamas are driving investors toward safe-haven assets like silver.”
Hyerczyck said that expectations for further rate hikes from the U.S. central bank have waned, driven in part by dovish commentary from the Fed itself. “[R]ecent comments from Fed officials are sparking a debate on the necessity and timing of further hikes,” he wrote. “Minneapolis Fed President Neel Kashkari and Atlanta Fed President Raphael Bostic have cast doubts on the urgency for additional hikes.”
This dovish outlook appears to be a “growing sentiment” among top Fed officials, Hyerczyck said, and the statements “have resulted in a weaker dollar, indirectly boosting the appeal of silver for investors.”
Among the macroeconomic factors he sees supporting silver are moderating price growth and rising geopolitical risk.
“Inflation, a significant concern earlier this year, is showing signs of retreating,” he said, noting recent comments from San Francisco Fed President Mary Daly that inflation is easing. “This lessening inflationary pressure reduces the opportunity cost of holding silver, an asset that doesn’t yield interest,” Hyerczyck said.
He added that investors will be closely watching this afternoon’s release of the Fed’s September meeting minutes and the U.S. CPI data on Thursday for further confirmation of the Fed’s dovish direction. “A higher-than-expected CPI could reignite talks of tighter monetary policy, which would undoubtedly put pressure on silver prices,” Hyerczyck said.
Heightened geopolitical tensions in the Middle East, and the Israel-Hamas conflict in particular, are also increasing demand for safe-haven investments, he noted. “In times of uncertainty, assets like silver often become the go-to choice for investors looking to hedge against volatility.”
Because silver is being influenced by disparate factors, Hyerczyck said that the precious metal’s short-term trajectory is difficult to discern. “While geopolitical tensions provide a supportive backdrop, the metal’s future moves will be heavily dictated by the upcoming U.S. economic indicators and the Federal Reserve’s policy direction,” he said. “Thus, the immediate outlook for silver remains delicately balanced between these contrasting market forces.”
Turning to the technical picture, Hyerczyck noted that the spot silver price “is nearing the trend line support at $22.23, which also coincides with the minor resistance level. A break above this dual threshold would typically indicate a bullish reversal, especially significant given that the commodity is rallying from a lower position.”
He added that silver is also not far below the 50-Day moving average of $22.97, which would add further bullish momentum if it’s successfully breached. “Considering all these factors, the market sentiment appears to be on the cusp of shifting from bearish to bullish, contingent on breaking and sustaining above these key levels,” he said.
Spot silver last traded at $22.02, and is up 0.83% on the session.
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A Brief History of The Health Support Uses of SilverFor thousands of years silver has been used as a healing agent by civilizations throughout the world. Its medical, preservative and restorative powers can be traced as far back as the ancient Greek and Roman Empires. Long before the development of modern pharmaceuticals, silver was employed as a germicide. Consider these interesting facts:
Silver Re-DiscoveredNot until the late 1800's did western scientists re-discover what had been known for thousands of years - that silver is a powerful germ fighter. Medicinal silver compounds were then developed and silver became commonly used as a medicine. By the early part of the 1900s, the use of silver was becoming widespread. By 1940 there were approximately four dozen different silver compounds on the market. Although there were a few flare-ups of negative publicity regarding medicinal silver in the early 1900s, (due to the overuse of certain types of protein-bound silver compounds causing a discoloration of the skin called argyria and due to a supply of improperly prepared and unstable silver) reputable medical journal reports demonstrated that a properly prepared colloidal dispersion of silver was completely suitable with no adverse side effects. T. H. Anderson Wells reported in the Lancet (February 16th, 1918) that a preparation of colloidal silver was "used intravenously. . . without any irritation of the kidneys and with no pigmentation of the skin. " New knowledge of body chemistry gave rise to the enormous array of applications for colloidal disinfectants and medicines and for on-going research into the capabilities and possibilities for silver colloids. However, Silver's "new-found" fame as a superior infection-fighting agent was short lived. How Silver Lost FavorDuring the 1930s, synthetically manufactured drugs began to make their appearance and the profits, together with the simplicities of manufacturing this new source of treatment, became a powerful force in the marketplace. There was much excitement over the new 'wonder drugs' and at that time, no antibiotic-resistant strains of disease organisms had surfaced. Silver quickly lost its status to modern antibiotics. On-going Uses of Colloidal SilverThe use of some silver preparations in mainstream medicine survived. Among them are the use of dilute silver nitrate in newborn babies' eyes to protect from infection and the use of "Silvadine," a silver based salve, in virtually every burn ward in America to kill infection. A new silver based bandage has recently been approved by the FDA and licensed for sale. Other uses that did not lose favor include:
But for the most part, with the discovery of pharmaceutical antibiotics, interest in silver as an anti-microbial agent declined almost to the point of extinction. The Resurgence of Silver in MedicineThe return of silver to conventional medicine began in the 1970s. The late Dr. Carl Moyer, chairman of Washington University's Department of Surgery, received a grant to develop better methods of treatment for burn victims. Dr. Margraf, as the chief biochemist, worked with Dr. Moyer and other surgeons to find an antiseptic strong enough, yet safe to use over large areas of the body. Dr. Margraf investigated 22 antiseptic compounds and found drawbacks in all of them. Reviewing earlier medical literature, Dr. Margraf found continual references to the use of silver. However, since concentrated silver nitrate is both corrosive and painful, he diluted the silver to a .5 percent solution and found that it killed invasive burn bacteria and permitted wounds to heal. Importantly, resistant strains did not appear. But, silver nitrate was far from ideal. So research continued for more suitable silver preparations. Silver sulphadiazine (Silvadene, Marion Laboratories) is now used in 70 percent of burn centers in America. Discovered by Dr. Charles Fox of Columbia University, sulphadiazine has also been successful in treating cholera, malaria and syphilis. It also stops the herpes virus, which is responsible for cold sores, shingles and worse. The history and uses of colloidal silver are well known and documented. They can be researched easily on the Internet through search engines and any colloid forum, bulletin boards or blogs. We cannot link to them or publish them here because Federal Law prohibits any claims or testimonials associating our products or product ingredients with any disease states. Keep in mind that the particle surface area of our colloidal silver product, MesoSilver, is the highest ever tested. This means it is the most effective of any colloidal silver product ever made. With not a single serious adverse event ever reported, it is also one of the safest supplements on the market today.
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The Silver Price Will Rise 4.83 Times as Far as Gold Pricehttp://goldprice.org/silver-and-gold-prices/2008/12/silver-price-will-rise-483-times-as-far.html Unless you understand this one principle, you understand nought about precious metals' bull markets: monetary demand, and monetary demand alone, drives both gold AND silver. It's not Indian wedding demand or the popularity of silver jewelry that drives their prices, but sheer monetary demand, holding them as "money" because the alternatives -- national currencies -- are clearly failing. WHEREFORE, before this bull market ends, you will need only 16 ounces of silver to buy one ounce of gold, which means from here that the silver price will rise 4.83 times as far as the gold price. Forget the siren song of the "gold-only" bugs, who have fallen for the myths of the money interest: both silver and gold are money, and always will be. GOLD ENTERING A VIRTUOUS CIRCLESeptember 3rd, 2010 by Egon von Greyerz GOLD ENTERING A VIRTUOUS CIRCLEFundamental and technical factors for gold are now in total harmony and gold is entering a virtuous circle that will drive the price up at its fastest pace since this bull market started in 1999.
Gold trendWe expect gold to start a substantial rise now which will continue for 5-10 months before any major correction. Gold's technical picture is extremely strong with a continuous rising pattern of higher highs and higher lows with the steepness of the curve increasing. From much higher levels we are likely to see a correction that could last up to a year before the next rise which will last several years before we see a significant peak. Once gold has topped we do not expect the same kind of decline as after the 1980 peak since gold is likely to become part of a future reserve currency. At that point gold will be a solid but unexciting investment with very little upside potential. But that is likely to be a few years away. In spite of a 5 times increase in the value of gold or an 80% decline against many currencies and stockmarkets in the last 11 years, most investors own no gold and still do not understand the importance and value of gold. In a world of constant money printing and credit creation leading to devaluing currencies and devaluing assets, gold reflects stability and is virtually the only store of value that cannot be destroyed by governments. The average asset manager, fund manager, pension fund or private individual owns no physical gold and at best has a very small exposure to some precious metals stocks. And in spite of this gold has gone up over 400% in 11 years. How is that possible? For the simple reason with the relatively modest demand that we have seen in the last few years, there is not enough physical gold even at these levels. The increase in demand that we have seen has most probably been satisfied by central banks leasing or lending their gold to the bullion banks. Central banks supposedly own 30,000 tons of gold but unofficial estimates of their real holdings are at 15,000 tons or less. So what are the factors that are likely to lead to a major rise in the gold price? We have for several years outlined in our Newsletters the problems in the world that inevitably will lead to massive money printing and a hyperinflationary depression (see for example "Alea Iacta Est" and "There Will Be No Double Dip…" on the Matterhorn Asset Management website). There are three insurmountable problems:
The effect of this massive $20 trillion infusion has been ephemeral since we are entering the autumn of 2010 with virtually every single economic indicator and statistic in the US deteriorating rapidly. With interest rates already at zero there is no ammunition left but one. And it is this specific last bullet that will be used to infinity in the next few years and starting very soon, namely UNLIMITED MONEY PRINTING. Every single area of the US economy will need support or printed money, whether it is the federal government, the states, the municipalities, banks, pension funds, insurance companies, the unemployed, corporations, health care, housing market, commercial real estate, individuals, etc, etc, etc. The list is endless and many other countries will follow. Before we talk about gold in hyperinflationary terms, let's look at where gold is likely to reach in today's money. Three realistic Gold targets: $6,000 - $7,000 - $10,000:
The three historical comparisons above (and see chart below) would put gold anywhere from $6,000 to $10,000 and this is without inflation, or more likely hyperinflation. In a hyperinflationary environment, the price gold will go to is really irrelevant since it depends on how much money is printed. In the Weimar Republic for example gold went to DM 100 trillion. What is more important is that gold is likely to go up at least 5 times from today without inflation and with hyperinflation gold will protect investors against the total destruction of paper money and many other assets. Wealth ProtectionGold must only be held in its physical form and the holder of gold must have direct access to the gold. We consider ETFs, gold in a bank (whether allocated or unallocated), fractal ownership of physical gold, futures or any other form of paper gold as very risky and a totally unsatisfactory method for owning gold. Physical gold should preferably be stored outside your country of residence and outside the banking system. The holder must have direct access to the vaults where the gold is stored. SilverSilver has been lagging gold since its peak at over $21 in 2008. For the last few months the gold/silver ratio has been consolidating between 58 and 71. The ratio is currently around 64 and is likely to start a move down to new lows below the 2006 low at just 44. So this is very good news for silver which is likely to outpace gold substantially in the next few years. Silver is probably the most undervalued precious metal today and has great potential. But there are many caveats for silver:
StockmarketsAt the beginning of July this year we sent out a message to investors that, based on our proprietary indicators, we expected stockmarkets to finish the correction up at the end of July and resume the major downtrend in August. We also said that gold would start its major rise in August. And this is exactly what has happened so far. We now expect major falls in all stockmarkets worldwide over a sustained period. We would not be surprised to see the Dow down to the 1,000 area (in today's terms) before this bear market in over. But it will not be a straight line and there will be extreme volatility. When hyperinflation sets in, stockmarkets will have a major but temporary surge. The only stocks that investors should hold are precious metals stocks and possibly some resource and food stocks. But it must be remembered that stocks do not represent the same degree of wealth preservation as physical precious metals held directly by the investor. CurrenciesCurrencies should in the next few years be looked upon as a necessary evil and not as a store of value. All currencies will continue to decline against gold, just as they have in the last 11 years and in the last 100 years. Due to money printing by most governments, we will have a fierce game of competitive devaluations by virtually all central banks. We have seen the Euro and the pound weaken substantially and the next currency the speculators will jump on is the US dollar. The dollar is grossly overvalued, partly due to the weak Euro, and is likely to weaken significantly due to the problems in the US economy. Currencies only reflect relative value and not absolute value since they can be and are printed until they reach their intrinsic value of zero. It is a fallacy to measure the value of a currency relative to another currency since they are all losing value. Currencies should only be measured against real money which is gold. This is the only method that reveals governments' deceitful actions in destroying the value of paper money. Therefore it is a mug's game to speculate or invest in currencies since they will all decline in an extremely volatile and unpredictable market. So are there currencies which are likely to perform better on a relative basis for funds that have to be held in paper money? We believe that Norwegian kroner, Swiss Franc, Canadian Dollar, Singapore Dollar, Australian Dollar and Renminbi will perform relatively better than many other currencies. Government Bond MarketsThe bond market is the biggest bubble in financial markets worldwide, in our opinion. Investors around the world are worried about the state of financial markets and therefore believe that government bonds represent a safe haven. These investors will receive the most enormous shock on two accounts. Firstly, no government will be able to repay the debts outstanding. So there will either be government defaults, moratoria, or money printing that totally destroys the value of the bonds. Secondly, interest rates are likely to go up significantly to at least 10-15%, totally destroying the value of the bonds. ConclusionWe are now entering a period when most major asset classes and in particular stocks, bonds and currencies are starting a major decline. Since most financial assets in the world are invested in these three categories plus real estate which will also decline, we are likely to experience major shocks and crises in the financial system and the world economy. Wealth protection is now more important than probably at any other time in history. Physical gold and possibly other precious metals directly controlled by the investor will be a vital part of a wealth preservation portfolio. |
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