We continue to think precious metals are one of the best risk vs. reward opportunities right now.
Last week, we shared the Gold to $5K Report with you from our friends over at All Star Charts.
You can check it out here, in case you missed it. The report outlines all of the reasons why Gold could hit $5,000/oz. sooner than the crowd expects.
Today we want to reiterate that it's not just Gold that looks attractive here. Silver is also poised to move higher.
As you can see above, Gold & Silver are confirming one another by hitting 6-month highs together.
The current leg higher began a couple of months ago after both metals formed a failed breakdown at support. As you might know, failed breakdowns often lead to fast moves higher, and we're starting to see that play out.
When you zoom out and look at a long-term chart of Silver, you'll notice it's in the process of forming a massive Cup & Handle pattern that dates back to 1980.
The next long-term objective for Silver is around $50, which is the all-time highs from 1980/2011. That's more than 100% higher here!
Silver futures continue to maintain leadership not only among metals, but compared to all futures as we can see in the leaderboard below.
Chart courtesy of finviz.com
The white metal has seen gains of close to ten percent month-to-date. None of the metals come close as copper futures, formerly the number two, has lost its shine lately as I shared the reason last week. When compared to silver futures, gold futures appear pale with gains of 2.62%.
All last week, I observed a pattern in the making, watching to see when it would trigger. As a result, exactly at the end of last week, the expected event happened. Here is a visual representation in the daily chart below.
There are two simple moving averages in the silver daily chart above. The blue line represents a 50-day moving average and the red one is a 200-day moving average. We can see that last week the short-term blue line crossed above the long-term red line. This pattern is called a “Golden Cross”. It is a bullish sign as it indicates a change in the trend to the upside. Continue reading "Golden Pattern For Silver, Not Gold"→
Please take a look at the graph below. These futures left their competitors far behind with a tremendous gain of almost twenty percent in only one month.
Chart courtesy of finviz.com
On a one-month horizon, silver's meteoric price increase is undeniable. None of the metals can even come close. Copper is lagging eight percent behind as gold futures show only half the performance of silver. By the way, I am about to show you the relative dynamics of these top metals in the chart below.
The price action in the silver futures has given a false hope to bulls this month.
The largest volume support (orange) has offered a solid support for the silver futures price lately. It is located between $17.4 and $18.2. The price has tested it three times already and failed to break it down.
The RSI has built a Bullish Divergence during the second touchdown at the end of the summer. The reaction was an imminent reversal to the upside. It was promising price action for the bulls as the futures price soared from $17.4 up to $21.3 by the start of this month to book the gain of almost four bucks (22% growth).
Afterwards, the same indicator has failed to break above the 50 barrier in spite of a strong impulse and so did the price rally. It stopped more than half dollar below the moving average (purple).
The price dropped back to the largest volume support after above mentioned failure but bounced then. It has managed to score more than one dollar from the latest valley of $18. This puts the silver futures between the hammer ($21.9, moving average resistance) and the anvil ($18, volume support).
The chart structure of the recent rally looks corrective. This means that the weakness of the price should resume. The next support is located at the following volume area of $15.8.
There are no other significant levels to catch the “falling knife” of silver except the “Flash-Crash” valley in $11.6. The drop to the latter could build a larger corrective structure visible on a bigger map.
The invalidation of the bearish outlook would come with the breakup of the moving average above $21.9.
The move we saw in Silver early this week to new 6-year high price levels, above $22.60, is quite likely the biggest upside move in Silver since the bottom in March 2020 – after the US stock market collapsed because of the COVID-19 virus event. This new rally in Silver is likely the move we’ve been suggesting to our followers relating to a series of measured upside price moves totaling approximately $5.30 in each advance.
As traders, watching bonds accelerate moderately higher as the US Dollar falls and the stock market attempts new lofty levels, we are intrigued by the move in metals because it suggests a large segment of investors believe a bubble is nearing very peak valuation levels. The only reason metals, particularly Silver, would be accelerating as it has recently is that traders have suddenly adopted a stronger demand for second-stage hedging of risk.
Gold is the traditional hedge for many traders in times of risk. Silver, being the second-tier hedge, typically start to rally 4 to 6+ months after Gold begins to move substantially higher. Gold is currently trading near all-time highs – near $1820. Silver just recently bottomed in March 2020 near $11.65 and has rallied more than 70% to current levels – above $20.35. If our research is correct, Silver will rally to levels above $26 within this current upside rally.
The multiple measured moves in Gold and Silver suggest waves of price advances happen in a series of structured upside price moves. We believe this current upside move in Silver will push price levels above $26 per ounce. If Gold continues to rally as Silver rallies, then future measured moves should target $31.50 and $36.75 in Silver – possibly higher. Continue reading "Silver Begins Big Upside Rally Attempt"→
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