Does Silver Price Surge Mark Beginning Of Wider Bull Market?

(July 2, 2020 - Joshua Mahony )

Silver forecast to continue its ascent, as precious metals hope to mimic the post-crash bull market beyond 2008.

Will the post-2008 surge provide a blueprint for silver?

Silver has been on the rise over recent months, with the recovery in markets providing the basis for an impressive 58% rise since the March low. However, major hurdles remain up ahead as we seek another bullish breakout to mimic the kind of post-recession bounce seen in 2008-2011.

The monthly timeframe highlights the trajectory of silver, with the Dow Jones Industrial Average overlaid upon it (blue line). Much like in 2008, this year saw a sharp decline in silver once the selling ramped up in the US equities.

However, much like 2008, the post-crash resurgence has brought about a recovery in silver prices, potentially establishing a fresh bullish trend.

However, this chart does serve to highlight the hurdles faced in attempting to negate the current downtrend in play since the 2011 peak. The creation of lower highs remains unless we see the $18.95-$19.65 zone. With that in mind, there is still potential for downside until we see that long-term trend change

Short-term trend remains bullish despite pullback

Silver has slumped back into trendline support over the past 24 hours, with the recent downside proving short lived, owing to the confluence of Fibonacci (61.8%) and trendline factors around $17.80.

The four-hour chart points towards a continued bullish trend, with the recent rise through $18.08 signalling expectations of further upside from here. With that in mind, the bullish trend remains in play unless we see a decline through the $17.38 lows from late June.

The fact that we have seen the likes of gold and silver both tracking stock prices over recent months will have dumbfounded many, who see their haven properties as a reason to believe the relationship should be negative.

Nonetheless, the gains seen in the wake of the 2008 crisis serve to highlight that previous metals can outperform in a post-crisis recovery period rather than during the crash itself.

As such, there is likely to be plenty of upside to come for silver, with the long-term downtrend coming into question upon the break through $18.95-$19.65 resistance.