• 5 hours Airlines Could Recover, But Crew Remain Elusive
  • 6 hours Meet The Man Behind The World's Most Exciting Oil Play
  • 1 day Crypto-Mining Immigration Could Be The Start Of A New Trend
  • 3 days Hawkish Fed Sends Gold Prices Crashing
  • 4 days Bezos Is Heading To Space This Sunday
  • 8 days El Salvador’s Surprise Bitcoin Move
  • 11 days Markets Unfazed As Inflation Hits 13-Year High
  • 11 days How the Token Economy is Disrupting Financial Markets
  • 13 days FBI Investigating 100 Types Of Ransomware Attacks
  • 15 days Fed Ends Corporate Credit Emergency Lending Program
  • 17 days AMC Becomes the Latest Winning Meme Stock After GameStop
  • 19 days The Real Reason Your 401k Has Been Lagging
  • 19 days China Lifts Cap On Births, Allows Three Children Per Couple
  • 21 days The Market Is Ripe For Another GameStop Saga
  • 24 days Senate Grills Big Banks Over Pandemic Opportunism
  • 26 days Cannabis Has A Major Cash Problem
  • 26 days Ransomware Netted Criminals $350M In 2020 Alone
  • 27 days Russia Is Taking On Google
  • 28 days Chinese Regulators Deal Another Big Blow To Bitcoin
  • 29 days Ohio Residents Brave Vaccine for Chance To Win $1M
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Clive Maund

Clive Maund

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports.

Contact Author

  1. Home
  2. Markets
  3. Other

Silver Market Update

Originally published October 18th, 2015.

Silverbugs have been getting worked up this month about the possibility of a new bullmarket in their favorite white metal, due to its sharp rally in the early days of the month, but as we will see in this update, the long-term charts and latest COTs reveal that there is little real cause for celebration - on the contrary, we should beware of an imminent downturn in silver and more than that, position ourselves to capitalize on it.

If we start with the 6-month chart, we can quickly see what got silverbugs and their cheerleaders stoked, the sharp rally in the early days of the month, which took silver to a 3-month closing high. The problem now is that not only has silver not made any further significant progress since, as it has battled the resistance near to its 200-day moving average, but the Commercials have been aggressively piling on the shorts as we will soon see, and when you see people who are almost always on the right side of the trade, it's not a bad idea to align yourself with them. Before leaving the 6-month chart we should note that the 50-day moving average is still quite a way below the 200-day, which is not a favorable configuration.

Silver 6-Month Chart

The Commercials certainly don't look like they are guilty of reckless behavior when we consider silver's 5-year chart. As we can see it remains stubbornly locked within a major downtrend, and with recent new lows and its moving averages in bearish alignment, this chart provides little real reason for excitement. What would it take to change the still dismal outlook? - that's easy to answer, a clear breakout from the long-term downtrend. This is not likely to occur of course unless the dollar index breaks down below the critical 92.50 - 93 support level on the index and drops away, so we will continue to keep a keen eye on that.

Silver 5-Year Chart

The fact that the Commercials are piling on the shorts here, as we can see on the latest COT chart below, of course implies that both gold and silver will drop, which further implies that the dollar will rally away from the danger zone (shown on the dollar index chart in the parallel Gold Market update). "How could the dollar rally recover?" you may well ask, given the Fed's enormous money printing of recent years which must be inflationary, and which is still coming through the pipe, but don't forget that this has to be set against a far greater $500 trillion mountain of atrophying trash overhanging the world financial system in the form of a plethora of bonds and derivatives, which is what is really strangling the world economy.

Silver COT

Finally, do not forget that even though the dollar looks like it will recover here to a certain extent, and gold and silver drop, that doesn't mean it's "out of the woods" - it could still turn and drop later and crash its key support.

 

Back to homepage

Leave a comment

Leave a comment