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Silver Continues to Look Supported
By: Christopher Lewis | January 25, 2024
• The silver market rallied again during the day on Thursday as we are still near the bottom of the overall consolidation area that should define this market.
Silver Markets Technical Analysis
Silver rallied a bit during the trading session on Thursday. And it looks to me like we are going to continue to see a lot of upward trajectory due to the fact that if for no other reason, we are near the bottom of the larger consolidation area. In other words, silver looks a bit “cheap” at this point in time.
For example, the $22 level underneath is a major support level, while the $26 level above is a major resistance barrier. At this point in time, I do think that short-term pullbacks offer buying opportunity. This is a market as long as we stay above the $22 level, should be thought of as one that is a value play.
Silver will of course be very sensitive to interest rates in the United States and other places as well. And it could be sniffing out the idea that perhaps central banks will have to start cutting rates. But it’s also very sensitive to the US dollar, as it has a negative correlation to both of those. So, pay attention to 10-year yields, the US dollar, and you can get a general idea of where silver will go.
There’s also industrial demand that comes into the picture as silver is much more industrial than gold. So, although it does tend to follow the same trajectory over time, and of course it is considered to be a precious metal, it is also considered to be an industrial metal as well. And that, of course, has its own influence. Ultimately, I just think that we are cheap when you look at the overall range. So, a pullback here should offer a nice buying opportunity.
If we were to break down below the crucial $22 support level, then it opens up a move down to the $21 level, which of course is support as well, as it was a swing low when we got that slight breakout only to return back into the same consolidation area we are in presently. Ultimately, I think it is more or less a situation where it is “steady as she goes.”
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Silver Continues to Rally
By: Christopher Lewis | January 24, 2024
• Silver had a strong session on Wednesday, as we have broken well above the $22.50 level, showing a nice rally from the $22 support region underneath.
Silver Markets Technical Analysis
You can see silver rallied rather significantly during the trading session on Wednesday. At this point, it looks like $22 is going to continue to offer significant support, and the way we are behaving now suggests that silver continues to go higher. The next target will be the 200-day EMA, which is near the $23.20 level and then after that, we have some structural resistance near the $23.50 level. With that being the case, we could get a little bit of a pushback here, but I think the dip will end up being a buying opportunity.
It’ll be interesting to see whether or not we can break above the $23.50 level because it does open up the possibility of another move to the $24.50 level. The $24.50 level being broken then opens up a move to the $26 level, which is the top of the overall longer-term consolidation phase that I see probably being a majority of what we do this year.
On the downside, if we were to turn around and break down below the $22 level, then we could get a move down to the $21 level, but that seems less and less likely at this point. I think we’ve got a situation here where market participants will continue to buy dips, but you also need to keep an eye on interest rates because there is a negative correlation between interest rates and silver. Furthermore, there is a negative correlation between silver and the US dollar.
In general, I do think this bodes well for the short term. Whether or not silver takes off for a longer term buying hold trade, we’ll have to wait and see. But there’s also the other impact of economic and industrial demand for silver. Keep in mind, it is an industrial metal as well. So that is something that must not be ignored. If you are going to play this market, keep in mind silver is very volatile. So, you want to keep your position size at least reasonable as silver can be quite volatile and cause major damage to your portfolio if you are not careful.
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Bear of the Day: First Majestic Silver (AG)
By: Zacks Investment Research | January 23, 2024
Company Overview
Zacks Rank #5 (Strong Sell) stock First Majestic Silver (AG) is a Canadian-based mining company focused on exploring, developing, and producing silver and other precious metals. The company operates predominately in Mexico and owns several silver mines, including the San Dimas, Santa Elena, and La Encantada silver mines. First Majestic Silver is known for its focus on silver production, and the company plays an important role in the global silver mining industry. The company’s operations involve extracting and processing silver ore to produce silver bullion, which contributes to meeting the demand for silver in various industrial and investment applications.
A Deflationary Environment is a Potential Headwind for Stores of Value
In 2022, inflation hit 40-year highs. However, since the headline-grabbing number was released in 2022, the U.S. Federal Reserve has gone on an interest rate hiking crusade and has broken the back of inflation. According to the Consumer Price Index (CPI), the inflation rate has slowed from near-double-digits to a little more than 3% annually. In addition, rent prices (an important proxy of inflation) dropped by a robust 8.8% in the most recent quarter – another sign inflation is moving in the right direction.
Image Source: Ryan Detrick, Carson Research
Where does silver come in? Silver miner stocks may underperform in a deflationary environment because investors often see the commodity as a hedge against inflation. Furthermore, deflationary pressures may lower commodity prices overall, affecting the profitability of silver mining operations.
Relative Weakness and Choppy Price Action Equate to Opportunity Cost
The old Wall Street adage says,“The trend is your friend.” Unfortunately for AG investors,the stock has been trendless for years and has exhibited relative weakness over the past three years. AG is down a painful 65% over the past three years, while the S&P 500 Index is up 24.7%. In other words, recent history tells us that investors are achieving higher returns with less risk by simply investing in a basket of diverse industries.
Image Source: Zacks Investment Research
Wall Street is Bearish
Years of proprietary research at Zacks tells us that earnings estimates are one of the best ways to predict future stock prices. In the past 90 days, Wall Street has revised AG consensus estimates lower. To make matters worse, AG has a poor EPS surprise track record – the company has missed Zacks Consensus Estimates in 10 of the past 11 quarters (the opposite of what investors want to see.)
Image Source: Zacks Investment Research
Bottom Line
A deflationary environment poses a headwind for silver miner stocks such as Zacks #5 (Strong Sell) stock First Majestic Silver. With a recent history of relative weakness, choppy price action, and a bearish sentiment on Wall Street, AG investors may need to carefully assess the risks and consider the impact of deflationary pressures on the profitability of silver mining operations.
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Silver Continues to Test Major Support
By: Christopher Lewis | January 23, 2024
• Silver bounced a bit from a major support region during the trading session on Tuesday, as we continue to look at the $22 level as crucial.
Silver Markets Technical Analysis
The silver market rallied a bit during the trading session, and as a result, it certainly looks like it is trying to do everything it can to hang on to the $22 level. The $22 level is an area that’s been massively support multiple times and therefore, I think it continues to attract a certain amount of upward momentum. The market will then, I think at least, try to push towards $22.75 or so, and perhaps even beyond there. If we can break that level, then we can start to look at the 200 day EMA, and eventually after that, we would be looking at the top of the overall range which is at the $26 level. Keep in mind silver is very sensitive to interest rates and of course the US dollar so, that being said, I think you’ve got to look at this and keep an eye on the US dollar index as well as the 10-year yield.
They all coincide together to give you a picture of what might happen with this metal. Furthermore, you also have to pay attention to industrial demand because silver is much more industrial than gold, so although it does tend to follow gold longer term, the reality is that it also has quite a few more headwinds to come into the picture. If we break down below the $22 level, then it’s possible that we could go down to the $21 level, where I see even more support.
So, at this point I think a lot of value hunting is going on in the silver market and you just have to treat it as such. Be cautious with your position sizing and recognize the fact that the market is extraordinarily volatile. All things being equal, silver is at the bottom of the larger and longer term consolidation area, and therefore I think you need to look at this as a valuable opportunity more than anything else. With this, it’s only a matter of time before we do rally a bit at this point and reach toward the upper part of the consolidation over the longer term.
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Market Melody: Decoding Silver’s Trends, Breakdowns, and Support Levels
By: Bruce Powers | January 22, 2024
• Silver sees deteriorating demand, putting lower trendlines at risk of being tested as support.
The technical picture in silver deteriorated on Monday as it fell to a new retracement low with a wide range red candle. Trading continues near the lows of the day but at the time of this writing the low is at 21.93. Minor support was seen there leading to a small bounce. Support was seen at the 78.6% Fibonacci level of a falling ABCD pattern, leaving the impression that it is recognized by the market. If a continuation of the ABCD pattern is triggered on a drop below today’s low of 21.93, silver will next target a full completion of the pattern at 21.21.
Completes 78.6% Extension Target
As discussed previously, the ABCD pattern can be extended by Fibonacci ratios. A standard target has the CD leg match the price change in the AB leg. Also, the 61.8% and 78.6% Fibonacci levels with the CD show a harmonic relationship. This means that based on the ABCD pattern along today’s low has the potential to be a bottom. However, other signs within the charts show silver at risk of testing lower support levels.
Lower Price Levels at Risk of Being Hit
Today, silver triggered a breakdown from a trendline thereby putting the lower trendlines at risk of being reached. You can see that the 78.6% Fibonacci retracement at 21.80 is very close to the long-term uptrend line, while the internal trendline is close to a match with the 100% completion of the ABCD pattern at 21.21. Each of these price levels may see signs of support if silver falls below that low. There is a large symmetrical triangle in silver that saw a false breakout in late-November. If silver fulfills a complete swing back it would be testing support around the bottom of the triangle near 21.21.
Signs of Deterioration
Signs of deterioration in the strength of demand can be seen with the 20-Day MA as it has recently fallen below both the 50 and 200-Day moving averages. You can see how the 20-Day line is recognizing the internal declining trendline as well. Given today’s definitive bearish day, downside targets are most likely to be tested. Additional bounces from today’s lows heads up into resistance around the above internal uptrend line. Today’s high at 22.66 can be used as a proxy for that line.
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Silver Continues to Test The Bottom of The Overall Range
By: Christopher Lewis | January 22, 2024
• Silver fell early during the trading session on Monday, reaching the $22 level.
Silver Markets Technical Analysis
You can see silver has fallen pretty hard early in the session on Monday as it looks like we are continuing to threaten the $22 level. I do believe that the $22 level is an area that will continue to hold and you can see that short-term traders have already come back into the market looking to defend it. So, it could be a buying opportunity but I would not get too big, though.
Silver does tend to be very noisy and therefore it can be somewhat dangerous to trade, but having said that, this is a market that I think has got a pretty clear support level underneath that you will be paying attention to. If we can break above the $22.50 level, then I suspect that silver has a real shot at going quite a bit higher to the 200 day EMA right around the $23.20 level.
Breaking below the $22 level would obviously be very negative, but even in that environment, I don’t think I would be a seller because there seems to be a lot of buying pressure underneath there that extends down to at least the $21 level. So, with that in mind, if you have the ability to take on a small position, this might be an opportune moment.
What you will want to see is the US dollar fall a bit and interest rates fall a bit, both of which are very possible, but there really isn’t much in the way of economic announcements on Mondays, so there really isn’t a whole lot to get anybody excited. Keep in mind that silver is an industrial metal, so that comes into play as well, and that might be part of what’s been a little bit negative as of late, but nonetheless, we are still very much in this huge consolidation phase, and I just don’t see that changing very easily. As we are at the bottom of that range, it is probably more likely than not that the buyers will return and this is a bullish market, at least for the short term.
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Silver Continues to Find Buyers on Dips
By: Christopher Lewis | January 19, 2024
• Silver initially fell during the week but has found a little bit of buying pressure above the crucial $22 level yet again.
Silver Markets Weekly Technical Analysis
Thesilver market initially fell during the week, but we continue to find buyers underneath who are attracted to this market. The $22 level underneath is a large round number that a lot of people will be paying attention to, and an area where we’ve seen buyers in the past anyway. Furthermore, we have the 200-week EMA in that same region, so I do think that it is probably only a matter of time before we go higher. If we can break above the 50-week EMA, then it opens up a move towards the $24.50 level, possibly even the $26 level. In general, this is a situation where every time we drop, it is just an opportunity to pick up cheap silver.
If we were to break down below the $22 level, then it’s possible that we could go down to the $21 level. But right now, I think we could be carving out more of the same type of consolidation that we’ve seen so much of in the last several years. This could be the fourth year in a row that we carve out a range. Right now, it looks like $22 on the bottom and $26 on the top, and that does tend to get tested and occasionally broken through, but if you look at the lines on the chart, you can see clearly these are two levels that have mattered for quite some time. All things being equal, I am bullish on silver, but I recognize that there are a lot of moving pieces at the moment, and therefore we will continue to see a lot of volatility here.
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Silver Continues to Look For Buyers Just Underneath
By: Christopher Lewis | January 17, 2024
• Silver markets look as if they are trying to stabilize near the $22.50 level, but I also believe that there is an overall range that extends all the way down to the $22 level, meaning that value can be found, but keep in mind that silver is extraordinarily noisy.
Silver Markets Technical Analysis
Silver initially fell during the trading session on Wednesday but has turned around to show signs of life again. By doing so, it suggests that there is a certain amount of support near the $22.50 level that traders are paying attention to. Whether or not it ends up being longer term support remains to be seen because I think it’s more or less a support zone that we are talking about, not necessarily a support line. What I mean by this is that the support probably extends down to the $22 level. On the upside, the 200 day EMA sits right around the $23.33 level and if we can break that, then I think it’s a very good sign for silver going much higher. At that juncture, I would expect a market to go looking towards the $24.50 level above, which has been important multiple times.
And if we can break above there, then silver is very likely to go looking towards the $26 level. While bullish on silver, I recognize that it is a very difficult and choppy market under the best of circumstances and right now this is not the best of circumstances. Because of this, I think you have to be very cautious with your position sizing, but that’s probably sound advice when trading silver under any condition.
All things being equal, I do think that you will have to pay attention to the bond market, the 10 year yield specifically, in the United States, because it does have a negative correlation. Pay attention to the US dollar as well because it also has a negative correlation quite often for the exact same reasons. So, with that, I think you are looking to buy dips in the silver market, but I would not get aggressive in position sizing until the market starts to prove to you that your position is the correct one. At that point, then you can start to add to your position and truly start to try to capitalize on momentum.
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Silver Continues to be Very Noisy
By: Christopher Lewis | January 16, 2024
• Silver markets fell during the Tuesday session as traders came back from the holiday in full force.
Silver Markets Technical Analysis
Silver has fallen a bit during the Tuesday session and at this point in time it certainly looks like we are going to continue to see a lot of noisy behavior. That being said, the market is likely to continue to see a lot of back and forth, but all things being equal, I do think that the $22 level underneath will end up being a major support level that people hang on to. As long as we can stay above the $22 level, it gives us an idea that we are just simply going to stay in the same consolidation region.
The 200-day EMA above offers short-term resistance and breaking above that level then opens up the possibility of a move to the $24.50 level, and then possibly even as high as the $26 level, which is the top of the longer term consolidation area. So, with that being said, the market is most certainly one which is going to be noisy, influenced by multiple different things at the same time, not the least of which would be interest rates, but we also have to worry about geopolitical concerns and of course we have to worry about the perceived central bank direction.
With all of this being said, I think we are essentially in the middle of a consolidation phase that could very well end up lasting most of the year. So, as we are closer to the bottom of the overall range than the top, I think it’s probably only a matter of time before we bounce, but I would let it pull back a bit further before actually buying into this market. All things considered, I do like silver for the longer term but right now it looks like we are struggling a bit to pick up momentum, and therefore it is market that you need to be rather cautious with at the moment, as there are so many different moving pieces currently being factored into the marketplace.
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Navigating Silver’s Volatility: Patterns, Support Challenges, and Breakout Signals
By: Bruce Powers | January 16, 2024
• As silver navigates through consolidation, the convergence of moving averages points to a looming burst of volatility, possibly marking the end of an extended period of subdued price action.
A narrow range low volatility day was seen in silver on Monday. It tested resistance around the internal uptrend line and 61.8% Fibonacci retracement, which was previously support, with a high of 23.33. Once support becomes resistance in a weakening trend, the potential for a bearish continuation increases. A drop below today’s low of 23.11 is short-term bearish but it keeps silver trading within a consolidation range until a breakout of the range. The range is a full weekly candle that goes from last week’s low of 22.48 to the high of 23.53. Trading this week could easily stay within last week’s range.
Weekly Bullish Pattern
Last week’s candlestick pattern is a bullish doji hammer as the doji is within the top half of the week’s range. This provides some optimism for the bulls as it indicates last week’s low of 22. 48 may hold and be the low support level for now. Yet, silver faces clear resistance that needs to be overcome for a bullish rally to follow the current correction.
Convergence of Moving Averages Heightens Risk of Volatility Pop
Silver is below its trend indicators. Both the uptrend line and all the moving averages, 20, 50, and 200-Day moving averages, have been tested as resistance as of last week. Further, volatility could pick up very soon. Notice that the three moving averages have converged together reflecting very low volatility in silver. Also, notice that this is occurring during a period of relatively sideways price action. Typically, an increase in volatility follows periods of low volatility, especially extreme low volatility.
This situation puts silver at risk of a sharp move in either direction in the relatively near future. It may be the beginning of a continuation of the rally up from the October swing low, or it could lead to further tests of support down near the uptrend line. Silver has been consolidating within a narrowing range for the past eight months or so. Converging moving averages may reflect the beginning of the completion of the consolidation phase.
Signs of a Completed Correction
A falling ABCD pattern may have completed last week at the 22.48 low. If so, it would mark the end of a correction in a developing uptrend. If so, a breakout above last week’s high of 23.53 signals the possible end of the correction and continuation of the uptrend from the October low. A daily close above 23.53 will confirm the breakout.
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Drilling Down Into Gold and Silver
By: Mish Schneider | January 13, 2024
Silver futures have been experiencing narrower ranges as well.
With higher lows since October, the recent support at $22.50 an ounce, if holds, could mean this week is the week we start to see this metal shine. A move above the 2 moving averages would be a start. In cash, a breakout over $24 should do it. In the ETF, that would happen over 21.75.
In the futures, the spot price had a mean reversion in momentum. Should silver get this follow through, the next big event will be if it begins to outperform gold. Then we'll know that this move in gold is not just a flight to safety, but, very possibly, that super cycle might be starting even a bit earlier than we thought.
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Silver Falls Again on Wednesday
By: Christopher Lewis | January 3, 2024
• Silver fell in the early hours on Wednesday to show a continuation of somewhat dire momentum to kick off the new year. That being said, there are plenty of support levels underneath.
Silver Markets Technical Analysis
During the session on Wednesday, silver fell to reach the crucial 200 day EMA. This is a rather ugly candlestick, but having said that, we are still very much in the middle of a lot of consolidation. Furthermore, we have to worry about ISM numbers, the jobs report, and a whole host of other things, not the least of which would be traders coming back into the markets and liquidity being all over the place during the next several sessions. Because of this, I don’t necessarily think silver is going to break down, but it is worth noting that we have had several negative days in a row.
Silver is going to behave a little bit differently than the gold market will, mainly due to the fact that it is also considered to be an industrial metal. If we are in fact going to see some type of slowdown out there, then demand for silver will probably drop. As things stand right now, I think there is a lot of support at the $22 level, maybe some minor support at the $23 level, so both of those are areas I would be paying close attention to for any type of bounce.
If we were to break down below $22, that opens up a move down to $21. On the upside, if we can take out the $24 level and go higher than that area, then the silver market could find itself reaching towards the $26 level eventually, which is the most recent high. It’s a sloppy and noisy range-bound type of market we are in, but that’s just the nature of silver to begin with.
Silver is an extremely volatile contract, so therefore you need to use a position size that makes sense when you don’t really know what the next thing to move silver is going to be. This is especially true during the first week of January when a lot of traders are just putting positions back on and there isn’t a whole lot to go off of as far as economic information.
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Silver Continues to Tread Water
By: Christopher Lewis | January 2, 2024
• The silver market dropped significantly during the trading session on Tuesday as we continue to see a lot of volatility in this market.
Silver Markets Technical Analysis
Silver rallied early during the first trading session of the year but has also given up some of the gains. So, it’ll be interesting to see how this plays out as the market is trying to come to grips with new liquidity. Ultimately, I do think that we are closer to the middle of the overall range than anything else. So, I think you have to look at this under that prism.
From a longer term standpoint. The 50 day EMA sits just below and should continue to offer support, but even below there, I think the $23.25 level, basically where the 200 day EMA sits, should also be plenty of support. That being said, there is noise just above, and I think it’s a bit of a grind, between now and the jobs number on Friday. Pay attention to the bond market, and interest rates in the 10-year yield dropping would certainly help silver, but at the same time, you could also make an argument that a strong jobs number may help silver as well, as it could push the idea of industrial demand coming back into the picture. Either way, we are essentially at fair value currently, as we are between the extreme low of $22 and the extreme high of $26, basically sitting right in the middle.
With that being the case, I think you have to wait for some type of impulsive candlestick in order to show momentum and then simply follow that. I do favor the upside at the moment, but I also recognize that a pullback could be in the cards. Silver will be thought of as a riskier investment if we get a sudden risk-off event, but right now it looks like Silver is doing everything it can to essentially tread water.
Ultimately, I believe this is a market that you need to be cautious with as the choppiness will almost certainly continue. With this being the case, I think it is a cautious market but also a market that should provide nice opportunities if we reach the outer edges of the range that we have formed.
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$Silver - We're approaching the sweet spot of the 4 year cycle. That's when it rallied 55% in 2016 and 156% in 2020. Forget about 2020 because it was during QE on steroids. Using a generous C=1.618xA relationship the target may be as high as 34.58. The high is due in July.
By: CyclesFan | January 1, 2024
• $Silver - We're approaching the sweet spot of the 4 year cycle. That's when it rallied 55% in 2016 and 156% in 2020. Forget about 2020 because it was during QE on steroids. Using a generous C=1.618xA relationship the target may be as high as 34.58. The high is due in July.
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2024 Silver Market Forecast: Economic Environment Supports Price Rise to $34.43
By: Bruce Powers | December 29, 2023
• Silver’s 2023 journey, marked by consolidation and global dynamics, sets the stage for a promising 2024 surge and increased demand amid economic shifts.
2023 Market Review
Silver prices spent much of 2023 consolidating in a relatively narrow range. It is on track to close almost flat for the year. As of late in the session Friday, December 29, silver is trading around $23.82. That shows silver down by $0.09 or 0.4% for the year. A high to low trading range was established relatively early in 2023. By May, a low of $19.76 was reached and a high of $26.12. Subsequent price action was contained within the established price range for the remainder of 2023 as volatility tightened for the rest of the year. The low for the year at $19.76 was hit on March 9 and had silver down by 17.5% or 4.16 points. On the upside, it was up as much as 9.2% at the year’s high of $26.12, reached on May 5.
Economic Outlook
The possibility of a recession in 2023 could mute demand for precious metals and other commodities.
However, changes in expectations of how fast interest rates may be lowered by the U.S. Federal Reserve and other central banks should have a positive impact on prices of other commodities as well as precious metals. Lower interest rates make assets that don’t produce income more attractive. Further, there are the conflicts in Ukraine and Israel. Those conflicts could spread, and new ones occur thereby driving haven assets, such as silver.
Silver Demand
Supply for silver is influenced by the fact that it is both a precious metal and used in industrial and consumer applications. Demand for silver is driven by mine supply, industrial demand, green technology demand and investment applications. Analysts anticipate that mining supply will remain muted in 2024 (below all-time highs) and below historical levels as investment in capital expenditures has been down in recent years. To increase mining production investment in capital needs to increase.
Increases in industrial demand are generally due to stronger economic growth. The stock market seems to be anticipating an improvement in economic growth as well for 2024. Silver industrial demand should increase as the solar and battery-electric vehicle markets continue to grow. Battery-electric vehicle sales in the U.S. rose above a million in 2023. CarGurus predicts electric vehicles may command as much as 50% of new vehicle sales by 2030. That’s up from 8% in 2023. The low end of the prediction is 23% by 2030.
Investment demand is supported by ETFs with physical backing. They provide an easy mechanism for investment in silver and silver production companies. According to a recent Bank of America report, such ETFs and similar mechanisms hold approximately 88% of silver stored in Independent Precious Metal Authority (LBMA) facilities. That comes to around 748 million ounces of silver.
Technical Analysis: Targets $34.43 High for 2024
Although silver prices consolidated during 2023, the expectation for 2024 is a change from a consolidation environment to a trending environment. The bigger picture shows an initial breakout of a large bull flag in April 2023. Resistance was quickly realized however, leading to consolidation for much of the remainder of the year. Subsequently, the lower rising trend line was tested as support in October and prices reversed higher.
Recently, support was successfully tested at the top of the declining channel. In late-November of 2023 a breakout of a second and much smaller corrective channel triggered spiking volatility. What this shows is that prices are strengthening, which should lead to further increases in demand and therefore higher prices.
What generally follows consolidation of price compression is an expansion of prices or trending. Currently, three moving averages, the 20 (red), 50 (orange), and 200 (blue), on both the daily and weekly time frames, have converged. This behavior represents price compression.
The flag pattern was proceeded by a large sharp rally of $18.61 or 165.8% to a high of $29.83 in August 2020. That occurred in only 20 weeks. Calculating the measuring objective for the bull flag provides two potential targets. One at 40.60 and the other at 42.75. The first adds the dollar amount progressed in the pole to the flag to arrive at a target and the second is from a percentage calculation. However, if those targets are eventually reached, I don’t think it will happen in 2024.
My high target for silver in 2024 is $34.43. That price level completes an ABCD pattern extended by the 161.8% Fibonacci ratio, and it is close to the 61.8% retracement of the full downtrend in silver that starts from the 2011 high of $49.78.
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Silver Price Forecast for 2024 – XAG/USD Could Go to $28 Next Year
By: Christopher Lewis | December 29, 2023
• One of the biggest mistakes that traders make is that they assume silver and gold are going to behave the same.
Silver has been very noisy during the bulk of 2023, and if you look at it in reference to other markets such as the EUR/USD, you can see a relatively common theme in the sense that we have essentially spent the entire year going nowhere.
You certainly would be forgiven if you were a trader that feels like this was a very eventful year because, quite frankly, it was. However, if you were an investor, you are looking at this with a certain amount of disbelief, as we are closing out the year basically where we started it. That’s not to say there wasn’t plenty of action to be dealt with, just that we have been stuck in a range for quite some time.
Interest Rates
One of the biggest drivers of precious metals markets is undoubtedly the interest rate markets. Interest rate markets in America are the biggest drivers of almost everything, and of course silver won’t be an exception. As interest rates rose during the year, we did see silver drop from the $26.20 region down to the $20.50 region. This was after an initial plunge at the beginning of the year when the Federal Reserve began to talk about tightening. There was a time frame where traders started to think that the Federal Reserve was going to cut rates, right around early spring when silver truly took off. The question now is whether or not they can find that magic again?
Silver Isn’t Gold
One of the biggest mistakes that traders make is that they assume silver and gold are going to behave the same. While he can be true for long periods of time, there are some nuances that you need to be aware of. Silver is essentially always undersupplied, but regardless there has been a very stable amount of resistance at times in this market. J.P. Morgan has been caught multiple times over the years manipulating the market, and gladly pays a fine every time it gets to be a bit too expensive for their liking. There are a few other banks that have been caught doing this as well, so in that sense you should probably pay attention to the fact that the silver market is pushed around.
It’s also worth noting that the market doesn’t just pay attention to interest rates, but it pays attention to industrial demand. Although there are some use cases for gold, silver is a much more industrial metal than a precious one these days, as it is a main ingredient to a lot of “green technology.” With that in mind, people will begin to wonder whether or not the Federal Reserve loosening monetary policy is a sign that they are going to boost the economy, or if it’s a sign of fear.
2024 Could Likely Be Similar
While it brings me no joy to think this, it’s very likely that 2024 could be very similar to 2023. This is because at the beginning of the year I anticipate that a lot of people will be paying attention to interest rates, and ignoring the fact that there could be some trouble under the hood. If the Federal Reserve is in fact going to cut rates due to some type of panic, that will have the US dollar strengthening eventually as traders run toward the treasury market, and silver suffers the double whammy of lower rates and less industrial demand.
As for the silver market in 2024, I suspect that we are going to test that $26.20 level, and if we can break above that level, we could go as high as $28. However, if there are concerns about the global economy that might be about as far as the market can go. As things stand right now, it looks like we are probably going to be in a somewhat similar range as to what we were last year.
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Silver Price Forecast – Silver Drifts Lower
By: Christopher Lewis | December 29, 2023
• Silver drifted a bit lower on the last trading day of the year, but at this point it looks like we are stuck in some type of trading range.
Silver Markets Technical Analysis
Looking at thesilver market, you can see that we did pull back just a bit on Friday, but it appears that the 50-day exponential moving average is doing everything it can to lift the market. We are in an area right now that has previously been both support and resistance, and of course, markets are a bit choppy at the moment. This isn’t a big surprise considering the time of year and of course the fact that the markets have been so volatile over the last several months.
With that being the case, I don’t read too much into the candlestick on Friday, but I do recognize that we are trying to carve out some type of range overall. So, with this in mind, I like the idea of buying on dips, but I need to see some type of bounce in order to get excited about it. A negative correlation to interest rates in the United States is well known, so I’ll be watching the 10-year yield.
In America, if it starts to drop again, then I’ll be very interested in silver. You will also have to pay attention to the economic numbers because silver is an industrial metal. So unlike gold, it isn’t just a precious metal, it is a market that will react positively to strong economic numbers. After all, demand for silver will pick up through industries such as electronics and “green technology.”
I am bullish on the silver market as the Federal Reserve is going to try to pump the economy up through loosening monetary policy in 2024, but I also recognize that there is a hard ceiling at $26. As things stand right now, it looks like the 200-day EMA, which is currently just below the 50-day EMA, is the bottom of the overall trend. If we break down below there then we have to reset and kind of rethink things as to where we could go longer term.
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Silver Continues to Consolidate
By: Christopher Lewis | December 28, 2023
• Silver initially tried to rally during the Thursday session but has seen quite a bit of short-term resistance as has been the case for the last several days.
Silver Markets Technical Analysis
Silver initially tried to rally on Thursday but has turned around to show signs of hesitation again. By doing so it looks as if we continue to use the $24 level as a bit of support. And then underneath there I think you also have to look at the 50-day EMA.
The 50-day EMA is quite often used by traders as dynamic support and resistance, and the fact that it is starting to turn a little higher suggests that it may re-enter that kind of scheme. I recognize that the market has been very choppy as of late, but that does make a lot of sense, considering that we are between Christmas and New Year’s Day, which of course has a major influence on liquidity, something that you should be paying attention to. Ultimately, silver is a very erratic market under the best of conditions, so this week is particularly difficult for those trying to navigate the futures markets or even the CFD markets.
Another issue as well will be the bond market, as higher interest rates would work against silver, but as we’ve seen interest rates in the United States start to drop, especially after the latest Federal Reserve meeting, it’s likely that silver will continue to benefit from this. In that scenario, I anticipate that silver could go looking to the $26 level above, but that might be a move for January.
Any pullback at this point in time appears to be a buying opportunity on short-term charts, but a breakdown below the 50-day EMA could change things, perhaps opening up a move back down to the $22.80 level where we had lodged from a couple of weeks ago. Regardless, keep in mind that silver not only is sensitive to the interest rate situation, but it’s also sensitive to industrial use case as well, so if we do find ourselves heading into a recession, silver will get punished for that.
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Silver Continues to See Volatility
By: Christopher Lewis | December 27, 2023
• Silver markets went back and forth during the session on Wednesday, as we tried to sort out what we are going to do with the $24 level.
Silver Markets Technical Analysis
Silver has shown itself to be very noisy, as we continue to see a lot of volatility. All things being equal, this is a market that I think will continue to attract a lot of attention, and I do think that it is probably only a matter of time before we go higher. After all, interest rates are dropping in the United States, and that has a major influence on what happens with the precious metals markets. On the upside, the $24.50 level has offered a little bit of resistance over the last couple of trading sessions, but ultimately, I think there is enough support underneath to keep this market afloat.
Now that the Federal Reserve is starting to show signs of cutting interest rates in 2024, that should continue to lift silver overall, as it is a highly sensitive commodity to interest rates. Remember, not only is it a precious metal, but it is also an industrial one. This means that lowering interest rates should spur on more economic activity, and as a result it could very well spur on the demand for silver through industrial usage.
Underneath, we have the 50-Day EMA near the $23.50 level that is rising toward the most recent price action, and it could offer a bit of a support barrier. If we were to turn around and break above the $24.50 level, then it opens up an attack on the possible ceiling in the market at the $26 level, an area that has been very difficult to get above multiple times recently. Nonetheless, I do think that is the longer-term target and I think it will be more or less a grind to the upside. Short-term pullbacks continue to offer buying opportunities unless something changes drastically in the bond markets, which it doesn’t look like it will.
Keep in mind that this time of year typically has a lot of liquidity issues, and silver is a highly volatile market to begin with. That being the case, you will need to be very cautious with your position sizing but from everything I see at the moment, this is a one-way trade.
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Silver Rallies to Kick Off The Week
By: Christopher Lewis | December 26, 2023
• Silver rallied a bit during the trading session on Tuesday, as we continue to see a lot of noisy behavior overall.
Silver Markets Technical Analysis
Silver rallied a bit during the trading session on Tuesday, as it looks like we are going to continue to see pressure to the upside. If we can continue to go higher, perhaps breaking above the $24.75 level, then it opens up the possibility of a move to the $26 level. That being said, we have a lot of work to do before we get there, but it is an area where we have seen noise previously, and therefore I think you have to look at it through the prism of whether or not we can kick off enough momentum.
During the holiday season, a lack of liquidity could cause major issues, but then again it could give us a bit of a boost in momentum as traders will hit air pockets moving the market around. Regardless, this is a market that has been very bullish for some time, so I think anytime we pull back from here, there should be buyers willing to get involved. Those buyers almost certainly recognize the $26 level is a major resistance barrier, and therefore, a lot of people are going to be looking at it.
Underneath, the $24 level opens up a move that could be a bit more of a pullback, and in that environment, we would have to look to the 50-Day EMA as an indicator that a lot of people will be paying close attention to. All things being equal, it’s not till we break down below that indicator that I would look at any pullback as something to think about seriously. In general, this should be a valuable proposition that a lot of people would look at any time we have seen some type of selloff followed by strength.
In general, this is a market that I think continues to look higher, and of course if the US dollar starts to fall apart a bit, that also helps silver as there’s a huge negative correlation between the USD and the silver market. All things being equal, this is a situation where I think a lot of traders will be looking to try to find some type of opportunity to get involved in what is obviously a very strong market.
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Silver Price Forecast For 2024: Rate Cuts May Push Silver Towards $30
By: Vladimir Zernov | December 23, 2023
• Rising demand, lower interest rates, and technical factors may trigger a strong rally in silver markets in 2024.
Key Insights
• Silver was range-bound in 2023 as rising yields and fluctuations in gold/silver ratio hurt market sentiment.
• The beginning of the rate cut cycle in 2024 may trigger a rally in precious metals and push silver to new highs.
• A move above the $26.00 level may push silver towards the next significant resistance level at $30.00.
Silver spent the whole year 2023 in the $20 – $26 range. Silver was moving inside a triangle and did not have a real trend as Treasury yields were rising until October, which was bearish for precious metals.
It should be noted that silver made several attempts to settle above the $26.00 level but faced strong resistance. These unsuccessful attempts were followed by sell-offs, so the resistance at $26.00 is the key level for silver.
Gold/silver ratio has also spent the year in a range. Wild swings in gold/silver ratio provided trading opportunities, but there was no strong trend. On the upside, the key resistance for gold/silver ratio is at 88.00. A move above this level will likely push gold/silver ratio towards 92.00, which would be bearish for silver. On the support side, gold/silver ratio has strong support near 78.50. If gold/silver ratio moves closer to this level, it will have a good chance to develop upside momentum.
Economic Outlook
At the start of 2023, many investors feared that recession was around the corner. However, these fears have not materialized, and it looks that most central banks will be able to orchestrate a soft landing. Europe is the only real problem due to the weakness of its manufacturing sector. Europe lost access to cheap energy from Russia and is forced to use more expensive sources, so its energy costs have increased for the foreseable future.
IMF expects that global growth would slow down from 3.0% in 2023 to 2.9% in 2024. Advanced economies are projected to slow down to the growth of 1.4% in the next year. FedWatch Tool indicates that Fed will likely start cutting rates in March 2024. Lower interest rates are bullish for silver that pays no interest, and the start of the rate cut cycle may provide additional support to silver prices.
Other central banks may also start cutting rates in 2024. ECB many be among the first ones to cut rates as EU inflation is slowing down at a rapid pace. Put simply, money is expected to get cheaper in the developed world, which may serve as a trigger for a precious metals rally.
Geopolitical Factors
In geopolitics, the year 2024 will be driven by current conflicts and the presidential election in the U.S. Traditionally, precious metals serve as safe-haven assets at times of geopolitical uncertainty. However, it should be noted that markets got somewhat accustomed to conflicts and do not always show a strong reaction to the news.
As conflicts drag on, sanctions have become a part of international life. As a result, non-Western countries have started to look for potential diversification of their reserves so that they could not be blocked in case their relations with the West sour for some reason. Silver is not included in central bank reserves, but rising demand for gold also provides support to silver prices.
Technological and Industrial Trends
According to Silver Institute, silver mine production has been mostly falling since 2016, when it reached a peak of 899.8 million ounces. For 2023, silver production is estimated at 842.1 million ounces.
The key driver for the decline in silver production was the inefficiency of silver miners. Many of these companies took debt to finance large projects that were not successful. As a result, the stocks of public silver miners have been a long-term disappointment for investors. In this light, there’s no queue to finance silver mines, which leads to problems with production growth.
The growth in recycling helped balance the market at a time when mine production was falling. Recycling brought 145.6 million ounces in 2016, increasing to an estimated 181.1 million in 2023.
Meanwhile, demand has been growing since 2016. Silver demand increased from 979.7 million ounces to an estimated 1,167 million ounces in 2023. Industrial demand has been steadily growing over this period, while physical investment and jewelry demand were rather volatile. Not surprisingly, photography demand was in constant decline as people switched to digital photos.
Overall, 2023 demand of 1,167 million ounces is expected to exceed demand of 1,024.9 million ounces, highlighting the strong fundamentals of silver market. As noted above, the world economy is expected to keep growing despite recession fears, so demand for silver will likely increase in 2024 and beyond.
Market Risks and Volatility
Gold/silver ratio is the key unknown for silver markets in 2024. Traders should note that fluctuations of gold/silver ratio have a significant impact on silver’s performance. For example, gold/silver ratio touched a low at 31.70 back in 2011, when the price of silver was at historic highs. During the Covid crisis, gold/silver ratio increased to 126.43 at its peak. At that time, silver traded near the $12.00 level.
It should be noted that the general trend in gold/silver ratio since 2011 was bullish, which is not good news for silver bulls. However, taking a look at the 100-year chart of gold/silver ratio, it is located at the high end of the historical range, which signals that silver has plenty of room for upside in the long term.
In general, silver is not too volatile for most of the time. However, silver is able to develop strong momentum when it has strong catalysts. At such times, silver traders should be prepared for fast moves.
TA Forecast for 2024
Silver Weekly Chart
From the techical point of view, silver spent the whole year inside a triangle. Each pullback was bought at higher levels, which is a bullish sign.
The recent rally was stopped at the high end of the triangle, so silver needs to climb above the $26.00 level to have a chance to develop sustainable upside momentum.
RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge. Traders should note that silver’s RSI has easily climbed above the 80 level back in 2020, so silver can develop strong momentum if a strong trend emerges.
As Fed is about to start cutting rates, precious metals will likely enjoy solid demand in 2024. A move above the $26.00 level may push silver towards the $30.00 level.
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Gold & Silver Bullion Outperform Mining Stocks Again in 2023
By: Mike Gleason | December 23, 2023
As the Christmas holiday approaches, bulls are celebrating some continued strength in gold and silver markets.
Gold is currently up 1.7% for the week to bring spot prices to $2,065 per ounce.
The monetary metal has a chance of finishing out the year next Friday at a new all-time high. But trading volumes are likely to be light in the holiday-shortened week.
And the big institutions that hold short positions on futures exchanges will not want to see gold post a headline-grabbing close above $2,100 an ounce for 2023. When gold surged above that level in overseas futures trading two weeks ago, it got abruptly slammed back down before U.S. markets opened.
Once this formidable resistance is broken, though, the path could be cleared for a very significant advance through uncharted territory in 2024.
Turning to the white metals, silver – like gold – also shows a weekly gain of 1.7% to trade at $24.48 an ounce. Platinum is up 3.6% since last Friday's close to come in at $991. And finally, the palladium market is adding another 2.8% this week after a massive increase a week ago to command $1,246 per ounce as of this Friday midday recording.
With just a few days left on the calendar before 2024, now is the time to consider any moves you might be able to make to save on taxes for 2023.
One strategy investors often employ is tax-loss selling. This entails selling assets that have gone down in value to offset any capital gains incurred on other assets.
Precious metals markets as well as conventional financial markets have rallied strongly over the past few weeks on expectations of a more dovish Federal Reserve. In fact, the Dow Jones Industrials rose to a new nominal all-time high this week. So, the typical investor is likely to be sitting on more gains than losses.
But some gold and silver bugs also choose to speculate on mining stocks. Many names in this volatile sector remain down for the year.
A shareholder of an underperforming miner could harvest that loss for tax purposes and then immediately reinvest the proceeds into a more solid precious metals asset – namely bullion itself.
While mining equities do have the potential to turn around and deliver huge returns for a while, history has shown that they can also collapse spectacularly.
And as a group, gold stocks have dramatically underperformed gold bullion itself. Gold is now trading at essentially the very top of its historical range. Meanwhile, the benchmark HUI gold miners index is still languishing at under half of its former high.
Those who prefer to own an asset that looks cheap versus gold but doesn't carry the risk of going bankrupt like a mining company might do well to opt for physical silver instead.
Another tax strategy worth weighing ahead of 2024 is to fully fund tax-deferred savings vehicles such as IRAs, 401(k)s, and Health Savings Accounts.
For 2023, you can contribute up to $6,500 to an IRA. If you're over age 50, you can contribute an additional $1,000. In 2024, those limits increase to $7,000 and $8,000 respectively.
If you want to enjoy maximum tax deferral, it's a good idea to make retirement account contributions for 2024 as early as possible in the New Year.
And if you want to enjoy tax-deferred inflation protection in hard assets, then consider investing your IRA in physical precious metals. It's a wealth protection double play.
Not only can you purchase, hold, and sell real precious metals inside a tax-advantaged Self-Directed Precious Metals IRA, but also you can withdraw your bullion and take direct physical possession of it under normal IRA distribution rules.
The IRS does impose certain restrictions on size and purity, but a wide variety of bullion coins, rounds, and bars are eligible. In addition to gold and silver, you can even hold physical platinum and palladium within an IRA.
To get started in funding a Self-Directed Precious Metals IRA, choose a reputable account trustee then arrange for a bullion dealer such as Money Metals Exchange to ship your IRA-eligible bullion to your designated depository. (Money Metals Depository is approved by several IRA trustees such as New Direction and Mountain West.)
What if you have an existing IRA but don't want to make new cash contributions to fund a precious metals purchase?
A conventional IRA, whether Roth or traditional, can be converted to a Self-Directed Precious Metals IRA. Switching is easy. Most providers can enroll you right online and work directly with your existing IRA custodian to transfer funds.
Your broker may have never told you about these fantastic options for obvious reasons. But they are totally legitimate.
That said, as every individual's tax situation is unique, we urge clients to consult with their own tax advisor to determine their best course of action.
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Silver Price Forecast – Silver Continues To See A Lot Of Choppy Behavior
By: Christopher Lewis | December 22, 2023
• The silver market has gone back and forth during the course of the trading session on Friday, as traders start to focus on the holidays.
Gold Markets Technical Analysis
Silver Markets Technical Analysis
Silver has gone back and forth during the trading session on Friday, as there is quite a bit of hesitation to jump into this market heading into the holidays. That does make a certain amount of sense, because quite frankly this is a situation where the buyers are in control, but sooner or later you have to take a little bit of a pullback after the shot straight up in the air. At this point in time, I have a couple of areas that I will be paying close attention to, as I do think that there are multiple support levels.
Underneath, the $24 level should be significant support, as it has been resistance in the past, and an area that we see a lot of action at. “Market memory” could continue to come into this picture and is a major reason why the market only breaks down so far. Below there, we also have the 50-Day EMA near the $23.50 level, so that of course is worth paying attention to as well as the technical traders out there pay close attention to that level. All things being equal, this is a scenario that continues to attract a lot of traders anytime it offers value, as interest rates in America continue to drop overall.
The market continues to see traders pricing in the idea of the Federal Reserve loosening next year, as many traders believe that they are going to cut 4 or 5 times. This does help precious metals in general, as it is a way to protect wealth. As rates go down, there’s less interest in holding paper and more in the idea of holding hard assets.
On the other hand, if we were to break above the top of the candlestick and not pullback, that opens up a move toward the crucial $26 level, with the $26 level above being a large, round, psychologically significant figure, an area where we have seen a lot of downward pressure from there before, and therefore it’s likely that we continue to see that as not only a target, but more like a brick wall as well. I have no interest in selling silver anytime soon.
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Silver Continues to Show Bullish Pressure
By: Christopher Lewis | December 21, 2023
• Silver rallied early during the trading session on Thursday, as it looks like we are trying to break out, despite the fact that we are heading into the holiday season.
Silver Markets Technical Analysis
Silver has rallied a bit during the trading session on Thursday as we continue to see plenty of interest in this market, especially as interest rates in the United States continue to drop. If that’s going to be the case, then it makes a certain amount of sense that we could eventually take off to the upside, testing the $26 level. Short-term pullbacks should end up being a nice buying opportunity, especially with the 50-Day EMA racing toward the upside. I do believe that the $24 level continues to offer support, but regardless, I think this is a situation where the market continues to look for “cheap silver.”
All things considered, it’s worth noting that we are getting ready for the holidays, so liquidity will be very thin. In that situation, the market will continue to see the lack of momentum jump into the market, so I would not read too much into the idea of silver sitting still if it does for the next week or so. All things being equal, pullbacks offer buying opportunities, therefore I think you have a situation where the dips continue to offer plenty of opportunities.
If we were to break down below the 50-Day EMA, then it’s possible that the market is likely to go looking to the 200-Day EMA. Anything below there then opens up the possibility of a more significant selloff, but at this point in time it doesn’t look like it’s going to happen anytime in the short term. It could of course, but that would probably have more to do with the idea of some type of massive recession, as the demand for silver would probably drop due to the fact that it is an industrial metal. That of course makes it a little bit different than gold, but as a general rule of thumb, silver does tend to follow gold or vice versa, so keep an eye on both charges, regardless of which one you are trying to trade. In general, this is a situation where we continue to see volatility but I believe upward pressure more than anything else.
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Silver Rallies Again
By: Christopher Lewis | December 20, 2023
• Silver broke a little higher during the trading session on Wednesday, as we continue to hang around the $24 level. That being said, the market does have a lot of resistance above that it will have to deal with.
Silver Markets Technical Analysis
Silver rallied a bit during the session on Wednesday, as we continue to see a lot of upward momentum. All things being equal, this is a market that every time we go back, there should be plenty of buyers willing to step in and take advantage of “sheet-metal.” The interest rate situation in the United States will have a major influence on where we go next, therefore we need to pay close attention to the idea of whether or not they are rising or falling. If they continue to fall, then we will more likely than not see silver take off, perhaps toward the $26 level again.
Ultimately, the $24 level is an area that a lot of people will look at as a bit of a magnet for price, and there is a certain amount of support underneath it, especially down to the 50-Day EMA, which is right around the $23.50 level. In general, silver tends to be negatively correlated to not only interest rates in the United States, but also the US dollar itself. So, let’s pay attention to that to determine where we go next. Overall, though, the momentum is certainly to the upside and it’s difficult to get bearish on this market anytime soon. In fact, I suspect that most people work in a look at this through the prism of buying dips anytime they can.
All things being equal, I believe that silver will have a good 2024, but as we head into the holiday season it could be a situation where we run out of liquidity. If that’s going to be the case, then it would not be surprising at all to see the market go sideways in the short term, even though we opened up with a bit of positivity on Wednesday. The closer we get to the end of the week, the less likely we are to see the market show a lot of volume, which of course can make it a strange market to begin with. Keep in mind that Monday is closed for Christmas, so a lot of traders will try to get their business done rather quickly between now and then.
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Silver Stretches Toward The $24 Level
By: Christopher Lewis | December 19, 2023
• Silver rallied slightly during the trading session on Tuesday to reach toward the $24 level, an area that is important in this market.
Silver Markets Technical Analysis
Silver has rallied slightly during the trading session on Tuesday to reach the $24 level, an area that of course a lot of people will pay close attention to as it is a large, round, psychologically significant figure, and an area where we have seen a little bit of resistance, but we have also broken through their multiple times. At this point, if we can break above the $24.25 level, then silver could really start to take off. That being said, remember that we have seen a massive repudiation of buying at the $26 level, which will of course come into the picture, as a certain amount of “market memory” will come into the picture, showing that the market will almost certainly react in this area.
That being said, I think there’s a situation where every time we dip, there should be buyers willing to get involved, as they can pick up “cheap silver.” Remember that silver is highly sensitive to the interest rate situation in the bond markets, most specifically the US. The 10 year yield is one that a lot of people pay close attention to, and if those yields continue to drop, it’s very likely that silver will continue to see a lot of upward momentum. After all, traders will do what they can to protect wealth as lower interest rates make bonds less valuable, and therefore precious metal suddenly get a little bit of a 2nd look.
Looking at the industrial demand side of silver, a lot of people put heavy weight on the idea of new “green technology” demand coming into the picture to put silver much more in demand. Furthermore, we have to ask whether or not the market is going to continue to see other industrial demand, which of course silver has plenty of. In general, this is a situation where I think you’re looking for dips as buying opportunities with the 200-Day EMA as support, preceded by the 50-Day EMA. I have no interest in shorting silver anytime soon, but I do recognize that as we head into the holiday season, liquidity could cause a lot of volatility.
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Unlocking Silver’s Potential: Resistance Challenges and Breakout Signals
By: Bruce Powers | December 18, 2023
• Unlocking the potential for a silver breakout: Indicators align at 24.28, signaling a crucial juncture and setting the stage for a potential upward surge.
Silver reached a high of 24.28 last week before encountering minor resistance. The area of that high and consolidation of the past several days has further tested resistance around that price zone. It has some significance as there are several indicators pointing to resistance in the 24.28 area. The 50% retracement of the most recent downswing is at 24.20. Moreover, resistance of the 20-Day MA (purple) is at 24.05, very close to today’s high of 24.04, and it is joined by the higher downtrend line.
Three Indicators Highlight Price Zone
Notice that the 20-Day line is close to converging with the trendline. When two indicators mark a similar price area, they are intimating that there is some significance to that price area. In other words, it frequently is either strong resistance or marks a pivot for an upside breakout. Since two indicators mark the price level, the rally following the breakout is sometimes more aggressive.
Preparing for Eventual Test of 26.12 High
Silver is working on an eventual advance to new trend highs, following the August 29 bottom at 17.54. An advance above December’s high of 25.91 provides a sign of strength that should lead to a breakout above May’s high of 26.12. Once a daily close occurs above that May high, a bullish trend continuation signal is confirmed, and the rally should accelerate to the upside. It would signal a move away from a consolidation pattern that has been developing for more than six months. Note that a break above 24.28 is also a weekly breakout.
First Breakout Shows Potential of Upside Move
You can see the aggressive demand in the first trendline breakout that began on November 24. Silver accelerated higher before finding resistance at 25.91. A sharp move higher was followed by a fast decline and eventual retest of support at the long-term downtrend line (dark blue). That occurred at the recent swing low at 22.495.
Support Levels
A deeper retracement will be indicated on a drop below today’s low at 23.65. Subsequently, there is a range of possible support from around 23.39 to 23.18. It starts with the 50% retracement and ends with the 61.8% Fibonacci retracement. In between those two levels is the 50-Day MA at 23.32.
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Silver Continues to Dance Around $24
By: Christopher Lewis | December 18, 2023
• The silver market has gone back and forth during the trading session on Monday, as we continue to dance around the $24 level.
Silver Markets Technical Analysis
Silver has gone back and forth during the course of the trading session on Monday, as we are hanging around the $24 level, an area that has been very important for quite some time. Ultimately, silver has recently seen a lot of volatility, but it looks like we are trying to recover based perhaps mainly on the idea that the Federal Reserve is going to loosen up monetary policy. At the latest monetary policy meeting, the “top plot” showed several cuts for 2024, and therefore the US dollar should lose a little bit of value. If that’s going to be the case, that certainly helps precious metals.
Underneath, the 50-Day EMA is offering a little bit of support and is rising. All things being equal, the market is likely to continue to see that as a short-term floor in the market, but if we were to break down below there, the market is more likely than not going to continue to drop down to the 200-Day EMA. On the other hand, if we were to turn around and take out the highs of the Friday session, it could send silver looking toward the $26 level above.
That’s an area that has been a major resistance barrier in the past, and therefore I think it’s an area that will be difficult to overcome. If we were to break above that level, it would obviously be extraordinarily bullish, but I don’t expect to see that happen anytime soon. After all, we have seen a massive selloff from the high recently, and therefore it’s likely that we will struggle to get above there. That doesn’t mean we can’t, but it does make sense that the $26 level will be very difficult to get beyond.
All of this being said, you will need to keep an eye on the 10 year yield in the United States, because yields do have a negative correlation with silver most of the time, and that can be a bit of a leading indicator as to where we could go next. With that being said, one eye on the 10 year yield and another on the silver market makes quite a bit of sense.
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Silver Continues the Rally
By: Christopher Lewis | December 14, 2023
• Silver rallied a bit during the trading session on Thursday, as we are breaking out above the $24 level.
Silver Markets Technical Analysis
Silver rallied a bit during the trading session on Thursday, as we are now breaking above the $24 level. That being said, the market is likely to continue to see buyers on dips, as silver is benefiting from the Federal Reserve pivoting a bit during the previous session. Ultimately, the market looks as if it is trying to sort out what it’s going to do next, but I still think that silver goes much higher. At this point, it would not surprise me at all to see silver go all the way back to the highs that we tried to make a while back.
Underneath, the 50-Day EMA is hanging around the $23.50 level, and that could be your short-term support level. I don’t think that we have any real shot at pulling back to that level, but it is something to keep in the back of your mind just in case. Ultimately, the US dollar falling is going to have a major influence on silver, and of course the bond markets will as well as they typically do. Yields dropping helps silver, and that is certainly something that we could see continue now that it looks like the Federal Reserve might be cutting rates next year. If that’s going to be the case, then obviously precious metals will do quite well.
Any dip at this point in time should be thought of as a potential value, I think that’s how most traders will look at it. With this being the case, I like the idea of buying anything close to the $24 level, possibly even down to the 50-Day EMA, but I would not jump “all in” right away as silver does tend to be very volatile and position sizing is very crucial. In general, I think this is a market that will eventually get to the $25 level, and once it does we could see some psychological resistance. That being said, we have, a long way in a very short amount of time, so there could be exhaustion that offers the buying opportunity that many of you will now be looking for. Until then, caution and patience will be needed.
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What an explosion by Silver right through its 200D moving average
By: Barchart | December 13, 2023
• What an explosion by Silver right through its 200D moving average.
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Silver Attempts to Rally
By: Christopher Lewis | December 12, 2023
• The silver market rallied just a bit during the trading session on Tuesday, as it looks like the oversold condition may get some relief.
Silver Markets Technical Analysis
Silver rallied ever so slightly during the early hours on Tuesday, showing signs of a potential recovery. At this point, the market looks as if it is completely oversold, and therefore a bounce does make a certain amount of sense. The 200-Day EMA sits just above, and it could offer a bit of resistance. If we were to break above there, then the market could open up the possibility of a move to the $23.50 level.
At this point, the market bouncing into that area does make a certain amount of sense, especially considering that the oversold condition almost certainly brings out value hunters. Furthermore, we also have central banks giving us interest rate decisions over the next couple of days, so that obviously will have an effect on the bond markets and therefore those who had shorted this market and made so much money over the last 4 or 5 sessions will be taking advantage of quick profits.
All things being equal, keep in mind that the silver market tends to be very noisy, and now that we have the Federal Reserve, Bank of England, Swiss National Bank, and the European Central Bank all releasing interest-rate statements, press conferences, and more, it’s likely that the precious metals markets will get moving. If they start to sound soft, that probably helps gold and silver both. However, you also have to keep in mind that silver is also an industrial metal, so economic announcements showing that the global economy might be slowing also could work against silver at the same time.
Underneath, the $22 level offers significant support, while the next major resistance barrier is near the $24 level. All things being equal, this is a market that I would anticipate a lot of volatility in, so with that being said, the market is likely to continue to see quick moves, and therefore you need to keep your position size rather small because the next couple of sessions could be very dangerous if you are not careful. Ultimately, this is a situation that you need to be cautious, but at the end of the day, the reality is that we are oversold.
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Challenges in Silver: Analyzing Potential Reversal Amidst Declining Trends
By: Bruce Powers | December 11, 2023
• Silver hits a new low at 22.70, prompting speculation on whether today’s decline marks the end of the retracement, with indicators pointing to potential support.
Silver continued to retrace its prior advance today, reaching a new trend low of 22.70. That low is at a potential support area defined by both the internal uptrend line and the 78.6% Fibonacci retracement at 22.73. Today is the sixth straight day of declines in silver. Could today’s low be the end of the correction?
Might Today’s Low Complete the Retracement?
It is possible that today’s low might be the bottom of the retracement. There are two indicators pointing to support near the low and the decline stopped in the support zone leading to an intraday bounce. If today’s support continues to hold, a bullish signal will be indicated on an advance above today’s high of 23.09. Potential resistance is also at the 50-Day MA (purple) at 23.08. Therefore, a rise above today’s high will also put silver back above its 50-Day line, providing an additional sign of strengthening.
Bounces into Resistance
Key resistance levels are around the prior swing high at 23.68. You can see how the area around that swing high led to consolidation for five days in November following the November 13 retracement low. Also, support was seen for one day on the way back down recently. Higher up is potential resistance around the 21-Day MA at 23.92, followed by a weekly level around 24.23.
Downward Pressure Remains Dominant
Regardless of the potential for a rally off today’s low, there are no signs of it yet. Silver has been coming down hard and barely hesitated before breaking below all potential support levels up until today. This behavior leaves support levels suspect. If a decline below today’s low of 22.70 triggers the likely target is another test of support at the long-term downtrend line (darker blue). Today it is around 22.45 or so. A little lower is the intersection of two trend lines at 22.32. Both the long-term downtrend and uptrend lines cross at that point. It should mark the maximum decline for the retracement.
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Silver Continues Its Plunge
By: Christopher Lewis | December 11, 2023
• Silver dropped yet again during the trading session on Monday, as it looks like we simply cannot find buyers.
Silver Markets Technical Analysis
Silver has plunged lower again during the trading session on Monday, as we simply cannot find buyers for this market. That being said, the selloff has been so drastic that will be interesting to see how this plays out. The $22 level underneath should be massive support, and it certainly looks as if we are going to try to find our way down to that level. Rallies at this point in time would be looked at with suspicion, and as long as gold continues to fall, I just don’t see how silver does any better.
All of this being said, keep in mind that central banks meet this week, including the European Central Bank, the Federal Reserve, the Bank of England, the Swiss National Bank, and a few other minor ones. In other words, the interest rate markets may be very volatile, if that is going to be the case, it’s very likely that silver will suffer as a result. After all, silver is extraordinarily sensitive to interest rates in general.
Furthermore, the silver market is an industrial metal as well as a precious one, and therefore some of the selling might be due to the fact that everybody expects to see a rather nasty recession around the world. That being said, this is a situation where the market is likely to remain suspicious of rallies, and therefore I think we need to see some type of follow-through in order for buyers to step in and try to pick up “cheap silver.” Either way, the one thing that you do want to make sure you avoid at this point in time is going to be a lot of leverage, because under the best of circumstances silver tends to be extraordinarily volatile.
Quite frankly, these are not the best of circumstances and as we head toward the holidays, liquidity could start to be a major issue. With this being the case, the market is one that you need to be very cautious about, but clearly there should be some type of value proposition presenting itself sooner or later. The question of course is when does this happen, and are you going to be patient enough to take advantage of it?
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$Silver - The huge bearish engulfing candle and the close below the 20 week MA confirm that it made an intermediate term high this week. The next weekly cycle low is due on the 3rd week of January but may extend by a week or 2 depending on the timing of the next daily cycle low.
By: CyclesFan | December 9, 2023
• $Silver - The huge bearish engulfing candle and the close below the 20 week MA confirm that it made an intermediate term high this week. The next weekly cycle low is due on the 3rd week of January but may extend by a week or 2 depending on the timing of the next daily cycle low.
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Final Resistance for Gold & Silver
By: Jordan Roy-Byrne | December 10, 2023
Gold has pulled back after a mini-blow-off on Monday that followed a new monthly and weekly all-time high.
It had cleared monthly resistance at $2000 and weekly resistance near $2030 before surging intraday to over $2100. Gold has settled in the $2000s with strong support, around $2000.
Although Gold has not broken out on the daily chart, the monthly and weekly breakout is more significant and implies a daily breakout will eventually follow.
SentimenTrader.com published a chart that can give us insight into the time of eventually.
This chart plots points at which Gold hit a new 52-week high but reversed lower as much as 2% or more.
These points include multiple points from 2001 to 2003, the 2006 and 2007 interim peaks, a peak before Covid, and one in early 2022.
The points in 2001, 2002, and 2003 are the best comparisons because those were early in a new secular bull market, and the gold price was much less overbought than in 2006 and 2007. Those four points bottomed at or around the 200-day moving average one or two months after the reversal.
Gold has support at $1985 to $2000, and its 200-day moving average, at $1960, should reach $1985 in January 2024. Also, note the last line of resistance near $2100.
It is easy to see why $2100 is the last stand for Gold bears. Why $26 is the last stand for Silver is more nuanced.
The $26 level is an important historical pivot point (first rally after the 1980 crash, major support after the 2011 peak, and resistance over the past two years) and marks the 50% retracement of the move from the all-time highs to early 1990s lows.
A clear break of $26 projects to a measured upside target of $33-$34, and there is very little resistance to $50.
Gold has already made a new monthly and weekly all-time high, but there is no looking back once the market clears $2100.
And that breakout will lead to Silver breaking above $26.
These are the final resistance levels before a full-blown, raging bull market in precious metals.
Get positioned during this weakness because share prices could accelerate much higher before next spring.
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Gold & Silver Outlook After Contrived Flushout...
By: Clive Maund | December 9, 2023
PM sector investors have just been royally played – first they are encouraged to pile in on gold’s breakout to new highs, which occurred when it was already very overbought, and now they are being pressured into barfing their holdings before the sector turns around and then goes on to break out for real.
Here’s how powerful forces set the trap – and this, incidentally, is why in this age of instant communications it takes them 3 days to report the latest COT data after they are in possession of it – during the week before gold’s dramatic but short-lived breakout last weekend, and after the COT data cut off point at Tuesday’s close, they piled on massive short positions, especially in silver. Then, after allowing gold to break out briefly overnight Sunday - Monday, they tank the gold price in very thin trading, instantly destroying the bullish sentiment so that would be investors pull their bids and the price plummets. They did the same with silver.
Now we come to the 2nd part of their game to wrong-foot the majority of investors in the sector and fleece them not just once but twice – they force prices low enough so that the pain becomes unbearable and longs barf their holdings, which Big Money then happily scoops up at knockdown prices before the sector turns on a dime and goes roaring back up again. This is my take on it and I may be wrong. I believe that those who engineered these moves will cover their shorts with huge profits going into this week and reverse to long and we will see prices stabilize before they recover.
We were not caught out by all this because we were buying large and mid-cap golds well before gold’s failed breakout and then sat and watched, and started buying some additional stocks we wanted anyway last week as they dropped back to better prices. Our plan now is to use the current reaction to move in and make additional purchases of the best stocks. The article GOLD SILVER and GDX outlook after turnaround yesterday posted on site last Tuesday 5th gave the downside target areas for gold and silver for this correction and gold has now fallen into its target area, with silver dropping a bit beyond where we expected, which looks like a deliberate attempt to flush out those of little faith.
But here’s the thing – although gold made a failed breakout attempt, the breakouts by large and mid-cap gold stocks have not failed - on the contrary, what we have seen so far is a normal post breakout reaction back to the support at the upper boundary of the base patterns that they broke out of, which means that this is a great place to buy them.
Here’s an example, Agnico Eagle Mines. Does this look like a failed breakout to you? – it doesn’t to me. Just look at it – persistent heavy volume on the clear breakout from a Head-and-Shoulders bottom late last month causing its Accumulation line to soar, followed by a normal reaction back to support at the upper boundary of the base pattern. So while the MSM are trumpeting the failed breakout of “the barbarous relic” what I see here is a near-perfect buy spot for this stock, and many others. It could drop back a little more in coming days perhaps dipping into the top of the base pattern which will make it even more of a buy.
Want another example? – try this for size. After its Accumulation line trended higher for months, mid-cap gold Minera Alamos’ stock staged a spectacular breakout from a Double Bottom late last month on strong volume. It too has reacted back to the perfect buying area close to the top of its base pattern. There are many more examples, especially among the large and mid-caps, but you get the idea.
So don’t let the MSM (mainstream financial media) con you into turning over your holdings to Big Money here right before the sector turns around and goes marching higher again because next time gold tries to break above the key $2100 level it’s likely to succeed and usher in the major bullmarket that we continue to expect. They fooled a lot of people with that false breakout, even “old hands” like Adam Hamilton who must be cringing after posting Gold-Record Momentum which appears to have been written at the false breakout high. Overall though, Hamilton should be proved right in due course – he usually is - after the sector has recovered from this nasty Big Money contrived hiccup which is viewed as providing a last golden opportunity to buy the sector and add to positions, especially in the big gold stocks which are at a “dream” entry point on post breakout reactions.
So get to it.
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Silver Plunges for the Week
By: Christopher Lewis | December 8, 2023
• Silver has been absolutely hammered during the course of the trading week, after initially kicking off with a boom on Monday.
Silver Markets Weekly Technical Analysis
Monday featured a “blow off top” in the silver market, and we have done nothing but sell off drastically since then. That being the case, it looks like the big money has abandoned the silver market, and it’s very likely that we continue to get lower from here. Short-term rallies will most certainly be sold into, and now I think the $24 level makes a massive barrier that we would have to overcome to even think remotely along the lines of buying this market.
The size of the candlestick is rather telling, and this could be the beginning of something rather ugly for silver going forward. That being said, we are also at the end of the year essentially, and that means that liquidity could be a major issue. If liquidity starts to drop off, then you have a situation where silver could be rather wild. Either way, position sizing is going to be crucial, and you do need to be cautious with the idea of getting to overly exposed to this market. Quite frankly, most big traders probably dump their positions on Friday, and are just simply standing out of the way. The market is likely to continue to see a lot of questions asked of it, so at this point I think you are probably better off as a longer-term trader just simply waiting until January to get involved.
Pay attention to the bond market, because interest rates will have a negative correlation to silver, just as the US dollar will. We could get erratic movement due to the lack of liquidity, so keep that in mind, and recognize the fact that you may be better off leaving this alone.
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GOLD SILVER and GDX outlook after turnaround yesterday...
By: Clive Maund | December 6, 2023
After the rather dramatic reversal in gold and silver yesterday it is clearly in order that we review their charts as soon as possible to consider what this action portends.
There was a story going about that a group of speculators last week took out heavy short positions in silver after the cut off date for the COTs on Tuesday, as it takes 3 days for them to get around to reporting the COT data, which delay is in the writer’s opinion intentional to provide a window for just this kind of operation.
However that may be, we had already flagged the $2100 level on gold as being critical some time ago – gold has to break clear above this level to kick off the next major bullmarket phase. It broke clear above this critical level in the Asian trade Sunday night whereupon it looks like powerful forces stepped in, in light trading conditions, to knock it back down below this level and their success in doing this caused it to drop back further during the day yesterday. Rather surprisingly PM stocks were not heavily impacted by all this as we can see on the GDX chart below, which is viewed as positive.
Even though the forces that don’t want gold going up were successful yesterday, all they succeeded in doing was postponing the inevitable and a big reason that they got away with it is that gold and silver were already overbought going into the weekend. Next time gold tries to break above this critical level it is likely to do so from a position of more strength.
So, what now? After a reversal day like we saw yesterday it is normal for some sort of correction to ensue and what is thought likely to happen is that gold and silver react back further in a zigzag pattern towards their positively aligned moving averages to the oval target areas drawn on their respective charts before they stabilize and turn higher again. However, the key point to keep in mind is that once gold succeeds in breaking above the key $2100 level it’s on and we just had a clear demonstration of how important this level is on Monday when the “big guns” were brought in to stop it holding a breakout above this level – and they won’t be so successful in future.
As for stocks, the GDX chart still looks strong with a genuine breakout from a Head-and-Shoulders bottom having occurred about a week ago that was on strong volume, driving its Accumulation line steeply higher. So it doesn’t look like they will react back much – GDX showed resilience and didn’t drop back by much yesterday considering the drop in the metals – so it is expected to drop back to the support shown and if it does drop back further into the base pattern it shouldn’t be by much before it stabilizes and turns higher again and any such drop will be viewed as presenting a great buying opportunity.
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Silver Continues to Attempt Stabilization
By: Christopher Lewis | December 7, 2023
• The silver market has gone back and forth during trading on Thursday, as we continue to try to stabilize just below the crucial $24 level.
Silver Markets Technical Analysis
Silver has been choppy on Thursday as we are trying to sort out whether or not we can continue to go higher, or if the rally is over. The recent selloff has been quite brutal, and it is most certainly overdone. If we can get a daily close above $24, then I think we have a shot at a recovery toward the $25.50 level over a significant amount of time. If we break down below the bottom of the candlestick for the trading session on Thursday it opens up the possibility of a move to the 50-Day EMA.
All things being equal, this is a situation where you have a lot of noisy behavior, and of course silver is a market that is very noisy under the best of circumstances, and right now we are not in the best of circumstances. The oversold condition of silver is certainly something to behold, because we have seen so much in the way of volatility in the precious metals markets, but as interest rates continue to fall in the United States, that should help silver overall, therefore I think you’ve got a real shot at some type of significant rally in this market. Furthermore, there will be people out there looking to pick up “cheap silver” after they may have missed this massive rally that got us up to this area to begin with. Because of this, I think you have to look at this through the prism of a potential buying opportunity but you need to see momentum shoot back to the upside in order to take advantage of it.
If we were to turn around break down below the 50-Day EMA, that would obviously be a very negative turn of events, and therefore open up a drop down to potentially the 200-Day EMA. The 200-Day EMA will obviously attract a lot of attention as it is considered to be a longer-term technical support level, and of course to determine the overall trend. It will fire off a lot of algorithms, and cause chaos in the markets. That being said, we are a long way from there right now, so I still like the idea of finding enough value to start buying again.
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Silver Attempts to Stabilize
By: Christopher Lewis | December 6, 2023
• Silver has been somewhat quiet during the trading session on Wednesday, sitting just above the $24 level.
Silver Markets Technical Analysis
Silver has gone back and forth during the trading session on Wednesday, as we are hanging about just above the $24 level. The $24 level of course is a large, round, psychologically significant figure, in an area that previously had been important. Now that we are trading the Wednesday session, we will have to pay close attention to the idea of the market trying to find its footing, as it has broken down rather significantly. All things being equal, the market has sold off so drastically that I would assume that sooner or later people are willing to pick up a little bit of value in this silver pits.
If we do break down below the $24 level, it could be a sign that we are ready to drop down to the 50-Day EMA. The 50-Day EMA is an indicator that will attract a lot of attention, especially as it is rising. All things being equal, this is a market that I think value hunters will return, but the next day or 2 might be somewhat quiet. After all, we have the jobs number coming out and that will have a major influence on the bond market.
The bond market of course has a major influence on silver, as rising rates tends to work against it. All things being equal, this is a situation where the next couple of days could give us an idea as to where we are going longer term, especially as the market has been so noisy as of late. If we do break down from here, then we could see a little bit of a bounce, but if we were to break down below the 50-Day EMA, then we could start to see a significant breakdown. I don’t see that happening anytime soon, but it is something you need to keep in the back of your mind. If we turn around and break above the $24.50 level, that’s also a sign that we are ready to continue to the upside and perhaps challenge the highs again. Either way, keep your position size reasonable as this market is noisy at the moment, even more so now that the Monday trading session has come and gone.
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Silver prices dip as U.S. economic data signals potential Fed tightening
By: Investing | December 5, 2023
NEW YORK - Silver prices edged lower today, with XAG/USD trading near $24.18 as the market reacted to a mix of US economic indicators that could influence Federal Reserve policy decisions.
The US ISM Services PMI outperformed expectations with a reading of 52.7, suggesting continued expansion in the service sector. However, this positive sentiment was dampened by the JOLTs Job Openings report, which showed a disappointing 8.73 million job openings compared to the anticipated 9.3 million.
This combination of data points to a potential tightening of Fed policy ahead of its December meeting as investors assess mixed signals from the labor market. US Treasury yields experienced a slight recovery, and the Dollar Index (DXY) climbed to 103.75, even though there was an overall drop in daily yields.
Investors are now looking forward to additional labor market data for further clues on the Fed's next move, with Wednesday's ADP Employment Change report and Friday's critical labor metrics, including Average Hourly Earnings, Unemployment Rate, and Nonfarm Payrolls.
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Silver Continues to Drift Lower
By: Christopher Lewis | December 5, 2023
• The silver markets got a horrific beating on Monday, and now it looks like we are going to continue to drift a bit lower on Tuesday. That being said, we now have to start asking whether the trend has changed?
Silver Markets Technical Analysis
Unfortunately for retail traders, many of them take a look at the chart and try to predict price based solely upon a candlestick. That being said, a lot of people got hurt on Monday, as precious metals took off almost immediately. We have seen the market turn around and break rather significantly to the downside, and if you watched my analysis during the day yesterday, you recognize that I said we probably have further to go. After all, a nasty candlestick like the one we formed on Monday very rarely happens in a vacuum.
I suspect that we are probably going to drift toward the $24 level underneath, which of course is a large, round, psychologically significant figure, and an area where we have seen some resistance previously. If we do fault in that area and bounce, I’m comfortable buying silver at that point. However, silver traders are focusing on the bond market, so unless you have an eye on the 10 year yield in the United States, you are probably going to be “flying blind” in this market. Because of this, I think there will be plenty of traders down there willing to try to find “cheap silver”, but it might be closer to that $24 level, possibly even the 50-Day EMA after that.
If we were to turn around and break above the $25 level without doing so, then it would obviously be a very bullish sign, but we had been so overbought for the last couple of days and of course we have seen this massive selloff after that, suggesting that we are in desperate need of some type of value to come back into the market.
Because of this, you have to be very cautious with your position sizing and recognize that the type of volatility we could be seen in the short time is something worth paying close attention to. With that being the case, you need to be very cautious with the idea of buying silver, but I think if you are patient enough, you probably have an opportunity coming.
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Breaking Down Silver’s Rally: Assessing Corrections, Retracements, and the Path Forward
By: Bruce Powers | December 4, 2023
• Silver’s surge to 25.91 hit a snag with a wide outside day, signaling potential retracement. What’s next for this volatile market?
After reaching a new trend high of 25.91 early in Monday’s trading session, silver reversed lower, generating a very wide outside day. At the time of this writing, the low of the day is 24.40 and today’s range is outside the trading range of the prior four days. The initial rally earlier today completed a rising extended ABCD pattern at 25.70. This is where the AB leg of the rally is extended by the Fibonacci ratio 127.2%, to define a target for the CD leg.
RSI Turns Down Following 25.91 Peak
Today’s low has almost completed a 38.2% Fibonacci retracement, which occurs at 24.36. Nevertheless, given today’s clear bearish reversal, at least so far, a test of support around the downtrend line looks very likely and possibly the previous swing high of 23.68. The Relative Strength Index (RSI) shows momentum turning down after being in overbought territory the past few days and points to a deeper retracement. You can see that last time the RSI showed a similar or higher overbought reading was back on the April 13, peak.
Monthly Breakout Triggered Last Friday
A monthly upside breakout was triggered on Friday and confirmed with a daily close above last month’s high of 25.27. Yet, today’s price action indicates that this current rally may be done for now, leading to further retracements or consolidation. Additional price levels to watch for possible support include last week’s low of 24.23, the 50% retracement level at 23.89, and the 61.8% Fibonacci retracement at 23.41, which matches the price level of the 200-Day MA.
Recent Bullish Improvements
Nonetheless, the relatively sharp advance off the recent swing low at 21.865 looks like a change in sentiment that may be in its early stages. The 20-Day MA recently crossed back above the 200-Day MA reflecting a strengthening trend. Further, an upside breakout above the short downtrend line has been confirmed over multiple days, which also confirms a breakout of a falling trend channel that starts from the May 2023 high.
Notice that today’s high in silver put it well above the long-term downtrend line (darker blue). It was the highest price relative to the downtrend line since silver first moved above the line earlier this year, on April 4. Once the current correction is complete, the stage is set for a continuation higher. Prior to the beginning of the correction begun in 2021, silver had risen by 165.8% in only 99 trading days. Its recent breakout opens the door to similar aggressive demand, as a possibility.
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Silver Has Been All Over The Place Monday
By: Christopher Lewis | December 4, 2023
• Silver has been all over the place during the trading session on Monday, as the initial opening for the trading week has seen quite a bit of volatility in the precious metals complex.
Silver Markets Technical Analysis
Silver initially took off to the upside at the start of the week, only to plunge lower, testing the $25 region. That being said, the market has been very noisy since then, so it’s difficult to get a gauge on where we are going next. The RSI had been in the oversold condition, so the fact that we plunged probably wasn’t a huge surprise considering that we were also at resistance, but the market does look like it is trying to turn around in the middle the day and I think this brings to light a very important point: Volatility is going to be a major issue in this market, so you need to be very cautious with your position sizing. While I do not advocate shorting this market, you can make a huge argument that we are overbought.
At this point, we are also going to start seeing the bond markets try to dictate where we go next. It currently looks as if the Fed Bonds Futures markets are trying to price in rate cuts by March, which of course means loose monetary policy might be on the horizon. If that’s the case, that typically works for precious metals. However, it is crucial to understand that the market had gotten a bit stretched, so some profit-taking would make sense regardless of what the bond markets tell us.
As we head into the month of December, liquidity starts to become a bit of an issue as well, so that’s also something that is most certainly worth paying attention to. At this point, silver is probably a market that’s better left alone, but if we were to break above the highs of the day on Monday, then obviously we would have much further to go to the upside. From a longer-term standpoint, I think you have to look at this as a buying opportunity on dips, but as I watched the charts I see the markets jumping all over the place in New York trading, showing you just how volatile this market is probably going to end up being.
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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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