SILVER: The Timeless Precious Metal
SILVER: The Timeless Precious Metal by Chris Belasi for Neptune Global
This timeless precious metal is widely held by investors of every stripe. There are great expectations for potential price gains in silver at the conclusion of this secular bull market, with many analysts calling for silver to outperform gold by a healthy margin. Conversely, there is widespread disappointment and frustration with silver since bullish calls, some wildly, have been put-out by many analysts going back many years. Not only have these calls for big price moves up fallen flat so far, but silver has underperformed verse gold and greatly underperformed verse the PMC Ounce™ for many years (note: the PMC Ounce™ still gives the investor a physical silver position).
Silver long-term: Below is our long-term price chart for silver. From its multi decade lows, silver is currently sitting on a .236 Fibonacci retracement level. By the way, our new friend and contributor Tino is a practitioner of the various wave theories, and can therefore attest to the importance of a Fibonacci (Fib) signal such as this. This Fib level held in late 2015 and is currently holding in mid 2019. This is very significant because in 2015 silver was collapsing from its 2011 high but held at this underlying level of support, thus establishing its significance.
Though silver’s long-term support (yellow line) was broken in mid 2018, prices held at the previously established underlying support level (red line). The red line represents long term support, the Fib .236 retracement point, and previous resistance which was broken back in ‘06/’07 and ’09. Silver analysis from a long-term technical perspective: Neutral/Bullish.
Silver short-term: This struggling metal started the month of June with a smart move up. Over the past 2 years, silver’s price has been in a sideways chop with a downward bias. This grinding price action has fatigued investors but something worth noting happened. A critical “wedge formation” materialized which signifies a coiling and compression of the price for an inevitable powerful break up or down in price (see charts below). This technical reading taken in conjunction with the fundamental story behind silver suggests the breakout should be to the upside.
Below is a close-up picture of the break-out from the compressed wedge in the short-term chart above.
Technical analysis and fundamentals are confirming a far more bullish than bearish outlook for silver. The recent breakout from its compressed wedge means we should get some definitive answers as to the direction for silver in short order. We expect to see silver trading in the high teens at the close of 2019 – which would be a very impressive gain when expressed as a percentage.
After a long and grueling trek, silver investors should be receiving some well-deserved relief. For the PMC Ounce™, which has handily outperformed silver over the last several years, it too will benefit nicely from a move up in silver since silver is a large physical component of the PMC Ounce™.
All the best.
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