Is Silver (SI) on the Verge of a Breakout or Breakdown?

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To follow up on my Gold (GC) analysis, I thought we could take a look at its oft forgotten, and less glamorous cousin, Silver (SI). One of the most popular precious metals to trade, Silver (SI) offers it's share of positives and negatives when compared to other instruments such as Gold (GC) or Platinum (PL). It is one of the more abundant precious metals and this gives it the feature of a low spot price in comparison attracting buyers that might not necessarily be interested in the higher priced metals. Primarily, it is looked at as a store of value or as a long-term investment vehicle and rarely as a day trading instrument. Thus we will be examining the long-term trends in Silver's (SI) spot price movement.

Currently Silver (SI) is trading around 16.50 USD coming off of a recent high, where it broke above 17 USD for a brief time earlier this year. It is important to keep in mind the USD is currently rallying and Silver (SI) tends to react inversely. Many are still very very bullish on the USD, but I am seeing signs of exhaustion, and with current events, it won't take much to reverse the trend. When and If this occurs Silver (SI) should see a very quick mark up from this key level.

If we hop in our time machine through the magic of charting it becomes clear we are at a very important level going back over 100 years. This pivot point, once it breaks, will start a brand new trend. Whether that will be north or south depends on some other factors. The last time Silver (SI) rallied to a high of 112 USD was from the early 70's when the Gold Standard was dropped, to 1980 where it found it's all-time high. We are at a very similar price level now but attitudes and valuation philosophies are no longer the same. At a glance, it seems the chart is forming a bearish head and shoulders pattern when we view post-2000. However, a closer look betrays this notion as it can be interpreted as a bullish falling wedge, consolidating along its supply line before starting a new leg up.

Taken at face value both seem equally plausible, however, there is an important relationship we need to observe that is extremely important to factor in if one wants to have a hope of accurately forecasting Silver's (SI) future price. This is, of course, the relationship with the aforementioned, and highly desirable metal, Gold (GC). Taking a  look at the Gold to Silver Ratio, or how many Ounces of Silver (SI) does it take to buy an ounce of Gold(GC), we can see it is at the Highest Point it's been since the early 90's! This gives us the impression that Silver (SI) is actually trading under oversold conditions and should surely correct. When looking at the price comparison that notion is only reinforced.


While Silver (SI) is more abundant than Gold (GC) this doesn't mean it isn't scarce. More and more Silver (SI) is lost every year and the world's supply drops. Mining is still active but the fact remains the world supply is getting smaller, even if it is a very slow process. Taking everything we know into consideration, Gold (GC) prices, inflation, etc. it is hard to avoid the conclusion that Silver (SI) is terribly undervalued and due for new highs. Despite this, I do believe in the near term there are going to be deeper discounts on an already discounted instrument. As Gold (GC) corrects downward over the next few weeks Silver (SI) will likely follow suit, dropping to 16 USD and possibly temporarily below. In my opinion, this will be a huge opportunity to buy that should not be ignored.  Silver (SI) traders have been speculating for months that Silver (SI) may be building support to launch.

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I have received no additional compensation other than the Ethereum that Hade Technologies pays to produce Exclusive content

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