Silver Chartbook - A Million Reasons To Buy Silver

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Florian Grummes
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Summary

  • In the larger picture silver is in a clear uptrend technically speaking.
  • As well, we are at such a significant point in history where fundamentals are now more important for long-term wealth preservation prediction than usual.
  • Looking at the monthly Gold/Silver-Ratio chart, we can see that there is still plenty of room for Silver to catch up.
  • Fundamentally and technically we find a million reasons for owning Silver.

Looking at the next silver (XAGUSD:CUR) chart, you will find a clear trend in motion. Undeniably. And still, there is always this feud between fundamentalists and chartists. In our opinion, any extreme view of trading is unhealthy. You want to have an open mind and let the market lead you along. The principle is that charts encompass all market participants' opinions, and as a sum, this entails all interpretations of fundamentals. While chartists love this argument, it overlooks that fundamentals are essential to evaluate a long-term market. This is especially significant when history changes on a more dramatic scale.

Silver, Weekly Chart, Multiyear range break, significant trend, range, and?

Silver in US Dollar, weekly chart as of January 28th, 2021.

We are at such a significant point in history where fundamentals are more important for long term wealth preservation prediction than usual. Here is why:

  • U.S. debt is at US$27 trillion.
  • With the transition of the current presidency and the need to print enormous amounts of money to fund national vaccinations, future monetary expansion is inevitable.
  • Silver is the only deflationary asset that's left that has lost value since the 1980s. While some investors might think this is a good reason not to buy Silver, a contrarian or counter-intuitive approach would find an opportunity in something so undervalued.
  • The greater the amount of currency in circulation, the greater the potential money flow they can trail into precious metals. When the economy collapses and cashflow comes flowing out of the stock market, it will find its way back into precious metals, and prices will rise.

Gold/Silver Ratio, Monthly Chart, Still room to catch up

Gold-Silver Ratio, monthly chart as of January 28th, 2021.

But this isn't all. As of December 11, 2020, Silver's one-year price change is up 41.94%, and gold's one-year price change is up 24.75%. Looking at the monthly Gold/Silver-Ratio chart above, we can see that there is still plenty of room for Silver to catch up. We even have support here right now, which would point out that gold runs first again, and then Silver is under pressure to follow.

Monthly Chart of Silver, Forecast

Silver in US Dollar, monthly chart as of January 28th, 2021.

Silver (XAGUSD:CUR) and SLV as well as PSLV are looking very bullish by not having retraced deep in its sideways range since March of last year (27.5%). Therefore, we find it sensible to look at fundamentals more closely when it comes to larger timeframe target projections. Metal prices are strongly correlated with the economic meltdown. So if the banks are too big to fail and keep forestalling inevitable problems into the future by ongoing money printing, we can continue to see prices remain less than stellar. Only when fear strikes the masses will the money leave the stock market and ultimately find itself into precious metals. Is COVID-19, the pandemic, that catalyst?

A million reasons to buy Silver

The disparity between economic conditions in corporate earnings will not post well for equities forever. Investors are building up alternative hedges. We have seen massive profits in Bitcoin. If "exotics" get attention like this, a more radical shift in common alternatives like Silver might be ahead.

JP Morgan has decreased their short positions after years of accumulating Silver. It leads one to believe that with rumors of J.P. Morgan's massive silver accumulation, it's relinquishing recent silver short positions. It could portend a future where silver prices can no longer be manipulated as they once were, as the main manipulator has decided to cash in.

With history changing so fast and a million reasons for owning Silver, it is wise to look at markets from both sides. A fundamental and a technical one. More than ever!

This article was written by

Florian Grummes profile picture
4.41K Followers
Florian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 25 years of experience in financial markets. Via Midas Touch Consulting he is publishing weekly gold, silver, bitcoin & cryptocurrency analysis for his numerous international readers. Florian is well known for combining technical, fundamental and sentiment analysis into one often accurate conclusion about the markets. www.midastouch-consulting.com
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Disclosure: I am/we are long XAG-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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