• 287 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Silver Market Update

Originally published April 11th, 2009.

The outlook for silver is viewed as very bullish, with a fine Cup and Handle base now approaching completion, that is shown on the accompanying 1-year silver chart.

There are a number of interesting observations that we can make looking at this chart. The first is that once silver broke below what was strong support at the $16 level back last August it went into a severe decline. After initially plunging the rate of decline eased off as it started to form a bowl shaped bottom area that togethor with the recent reaction we can define as a Cup and Handle base. Notice how it accelerated up the right side of the Cup in February, only to come to an abrupt stop and then reverse to break down from from the Cup, an event called for not only by the unsustainably steep rate of ascent of the Cup at that point, but by the price - moving average configuration, for the price had run way ahead of its rising 50-day moving average and also risen some considerable distance through a still falling 200-day, a classic setup for a substantial reaction. Now we have had a most satisfactory reaction in terms of price and time that has brought the price down close to an important support level and resulted in a proportionate Handle to complement the Cup. An important event to observe is the appearance of a large strongly bullish hammer in mid-March when the price spiked down intraday towards support but ended up closing near the day's high. Normally, when the price subsequently drops down near to the hammer low, as it has just done, it presents a favorable buying opoportunity. Observe also how despite the reaction of the past several weeks, the 50-day moving average has made a bullish cross above the 200-day. Finally we can add into the mix that Stochastics are close to their normal oversold limit calling for a probable imminent reversal to the upside.

In addition to what we can see on the silver chart, there are other synchronistic circumstantial factors that are creating an environment supportive of a new uptrend in silver, which have been discussed in the parallel Gold Market update. Briefly these are the fact that gold appears to have completed a 3-wave zig zag correction, copper and oil have picked up recently suggesting an improving outlook for commodities generally, and the Canadian CDNX index, which is the best barometer of gold and silver juniors, has been firming up nicely and is close to breaking out upside from a Head-and-Shoulders bottom, a development that is expected to lead to vigorous appreciation in quality junior mining stock prices.

 

Back to homepage

Leave a comment

Leave a comment