The silver price slightly crashed this week, as it lost 7.23 percent in just four trading days (COMEX trading was closed on Tuesday). We received many emails from concerned readers, and the common question was how deep the price of silver would still fall. The short answer: keep on reading InvestingHaven.com, as that is exactly what we do (we provide continuous coverage of markets and come out with forecasts once the chart signals it). The long answer … this article.
Before looking into the details, we want to reiterate that silver is perfectly on track to meet our silver price forecast for 2017. Almost one year ago, we were on record predicting that silver prices would fall in 2017, and presumably bottom in the second half of this year. We also appeared on MarketWatch in April calling for the silver price top of this year.
MarketWatch interviewed us, and what follows are two important quotes from the article:
But going forward, Tsaklanos said he believes that "it is more likely that the precious side of silver will become the more dominant trend, and that is pointing down."
And, in closing the article, MarketWatch added:
For this year, Tsaklanos predicts that silver prices will test their 2016 lows. Silver futures prices traded at just under $14 an ounce early last year.
At the time of writing, silver prices were going up, and some people laughed at us. They did not understand how we could be bearish as prices were going up. See, now that is exactly what the majority of investors do: they focus on the short term as opposed to looking into trend and patterns on price charts. The art of the chart is about identifying what prices are likely to do next even if that goes against short-term trends or against the crowd or against sentiment. In that respect, an interesting case is the following quote from our silver price forecast article written last year October:
Our analysis revealed a red flag for silver when the grey metal hit this triple resistance point which is visible on its long term chart. Let's be honest: a triple resistance point is not a coincidence, and it should be taken very seriously.
That was written right after the peak of 2016, right at a time when everyone (first and foremost financial media) was convinced that silver was in a new bull market.
We were a lonely voice saying that silver was NOT in a bull market until $22 was cleared. It never got cleared since then, so we remained firm that silver continued to be in a bear market.
This week, we got many messages from readers literally saying that they better had listened to what we were saying. It's sad for everyone in that situation, but it proves that markets are not there for you, dear reader, and markets do not care about you. That is the tough reality of markets. And you better do not listen to financial media and bloggers (certainly not the perma-bears or perma-bulls), as they got the dollar on the banner impressions on those articles but many investors lost their money.
Some examples from the period March to August 2016, when bloggers and financial media were convinced about silver's new bull market:
- FX Street: The silver bull market is back.
- Silverdoctors: A new gold and silver bull market is unfolding.
- Bullionvault: Silver signals new bull market.
- Mining.com: Silver's new bull market.
- Mining Metals: This chart signals a new silver bull market.
- Bloomberg: Silver trouncing gold signals bull market will continue (published right at the top of gold and silver prices in 2016!).
And this is our team, looking at things in an objective way, without emotions, without getting influenced by silver perma-bulls and financial (oh, Bloomberg wrote this or CNBC said that): MarketWatch features InvestingHaven's bearish silver price prediction.
How many times have we written in the last 12 months that gold MUST lead precious metals higher if the secular trend moves from long-term bearish to long-term bullish. Silver only leads the precious metals WITHIN an ongoing trend; it does not lead a trend change. Big difference, and we remained firm to that viewpoint. This week, it clearly appeared that our vision was 100% correct. One of the many articles in which we wrote that is this one about gold and silver prices in 2017.
We are proud to remain loyal to the charts, to our methodology, and to OUR observations (not the ones from others).
Silver price - what's next in 2017?
Let's focus on the silver price chart 2017 for now. Below is the long-term chart, on 12 years. That really is the time frame you need to get a clear view on where silver is going (i.e. determine trends and patterns on the price chart).
The silver price chart has two distinct channels: the one in purple (bear market trend) and the one in yellow (bull market trend). Silver is now exactly at the intersect of both channels.
Make no mistake: if silver moves outside of the yellow channel, it will be very bearish, and you should not be surprised to see prices dip at $10 later this year. We know people were laughing at us when we predicted it would be the most bearish scenario for 2017 when we made that forecast last summer, but the probability of that scenario taking place is realistic we would say.
The two critical price levels on the charts (as said, 90% of price points on a chart are meaningless):
- Above $15.50, silver is neutral to bearish.
- Below $14.00, silver is strongly bearish.
- Between $14 and $15.50, silver is in the twilight zone.
In case it was not clear yet, we wrote this conclusion in our article How To Determine The Future Price Of Silver, and we still believe this is highly accurate:
Though we understand our focus on the charts, and, for some, this could be 'too much of it'. However, price is the only thing that matters in investing. We could come across as silver bears, but nothing is further from the truth. We are bearish for 2017, but essentially we see a once-in-a-decade opportunity in the gold and silver market, and we must admit that we are preparing our shopping list with gold and silver miners. 2016 was great in the first months, but we believe that, after the ongoing sell off in precious metals, 2017 will be setting up for a long term bottom, and, hence, a great buying opportunity.