Silver Poised For A Mega Move: The Best Investment Theme Stares You In The Face

(June 26, 2019)

Predicting the Next Move in Silver

Silver bulls have been breathing easier after last week’s performance.  This is probably the best “silver pop” we’ve seen in several years.  The sad thing is it came rather unexpectedly so longer-term traders may not have caught the beginning of the run.  The chart of SLV shows just how quickly the pop hit.

I’ve drawn the downward resistance level line so you can clearly see why the silver naysayers were so loud starting about the end of February. Before that silver had been chopping along just fine, noisy for folks who don’t usually trade metals but nothing to be concerned about for more experienced silver watchers.

Then came the failure to get up through resistance in the middle of March. That really marked the beginning of a period of pain for silver. For silver prices to go up, more new people (traders and investors) need to be putting money into the market.  That didn’t happen because folks are still in ride-the-bull mode; we are, after all, either still on the longest-running bull market in history, or we have only just recently got shaken off, depending on how we choose to define “the end of the bull market”.

Whichever way you want to argue that point, for silver the reality is that more money is still not flowing into the sector.  We have seen some hints of new money coming in, but it is more like testing the waters than a final decision.  Believe me, when “everyone” decides it’s time to buy silver – or more broadly to buy safe-haven assets like gold, silver, and utility bonds – we’ll see a very sharp rise in the chart.

What we have seen recently is enough to know silver isn’t off the radar.  Look at how silver popped after the “first possible buy-the-break day” noted on the chart.  Then there was a hint that the US-China trade war might be wrapping up, and bam — the quick run was over.  But then “Oh No The Trade War Is Still A Thing!” And silver starts running up again.

So silver isn’t off the radar, even if we take a breather here. Might be a good time to take some short-term profits if you bought any lower than this, but I sure wouldn’t sell any long-term silver holds yet.  The best is yet to come. The only question is when. – The Gold Enthusiast

Silver seems Poised For A Mega Move

It’s been a pretty good couple of months for precious metals, but more so for gold than silver. Both are up but gold is up more, and the imbalance that this creates might be one of the major investment themes of the next few years.

The gold/silver ratio – that is, how many ounces of silver it takes to buy an ounce of gold – has bounced all over the place since the 1960s. But whenever it’s gotten extremely high – say above 80 – silver outperformed gold, sometimes dramatically.

As this is written, the ratio stands at 91, which is not far from its record high. With precious metals finally breaking out of a five-year siesta – and the world getting dramatically scarier – it’s not a surprise that safe haven assets are catching a bid. And it would also not be a surprise if the current move has legs, as central banks resume their easing and geopolitical tensions persist.

Combine a chaotic, easy-money world with silver’s relative cheapness and the result is a nice set-up, for both the metal and the stocks of the companies that mine it. Here’s the one-month chart for First Majestic Silver (AG), a large primary silver producer. It’s up about 40%, even while silver underperforms gold. Let the metal start to outperform in the context of an overall precious metals bull run, and stocks like this will go parabolic.

Assuming, of course, that history still matters. – John Rubino

Will Silver Soon Follow Gold’s Lead?

Stefan Gleason: Gold prices have broken out of a massive multi-year consolidation pattern to the upside. That suggests the possibility of a massive multi-year rally ahead!

To be sure, there is also the possibility of some retracing and back-testing this summer before the $1,400 level is conquered for good.

The fall and winter periods are typically more conducive to big precious metals rallies.

Seasonality, however, isn’t a dependable trading tool. Some technical analysts (who will go unnamed here) wrongly turned bearish on gold and gold stocks after they put in a disappointing early spring performance and were thought to be headed straight into the summer doldrums.

Instead, the summer solstice arrived with gold’s chart displaying a powerfully bullish long-term setup.

The one glaring problem with the current setup in precious metals markets: silver hasn’t yet confirmed gold’s breakout.

Silver needs to break above $15.50, then $16.00 (the last intermediate cycle high) in order to establish a bullish trend on par with gold’s.

The white metal’s lagging price performance in recent months has resulted in it trading at its biggest discount to gold in three decades.

Hardy silver bugs are excited at this rare opportunity to buy more ounces on the cheap. Others are understandably concerned that silver isn’t showing any leadership during rallies in the metals sector.

Silver, being a smaller and naturally more volatile market than gold, is supposed to amplify gold’s moves on both the upside and downside. So why is silver instead acting like an anemic version of gold?

Lots of reasons can be proffered – from record central bank buying of gold, to silver’s reliance on industrial demand, to low (official) inflation, to market manipulation.

It probably comes down largely to investor psychology. When precious metals markets have been out of the “mainstream” news cycle for years – trumped by a rising stock market and the rise of digital currencies – the general public won’t be interested in precious metals.

The super-rich and large institutional investors who are more apt to take contrarian positions in overlooked assets generally prefer gold over silver because it is more convenient for them to accumulate in large quantities.

We are still in the stealth phase of a precious metals bull market. When we enter the public participation phase – and demand for physical bullion increases – we have no doubt that silver will shine.