Silver Chartbook - Silver, Don't Be Fooled
- If you are holding your wealth in US dollars only, you are at extreme risk.
- Our monthly chart shows that gold has entered a prime buy zone between US$1,650 and US$1,700.
- While silver prices trade sideways, we think it’s time to buy again.
- There is a likelihood that prices might already take off in the upcoming week here from the secondary volume analysis support point (POC = point of control).
It is no secret that something is just quite not right in the Silver market. Recent news claim that historically this specific market is held within range by large wall street players. There are rumors of a short squeeze and a US$1,000 target where five figure percentage profits could be made. And so much more. As investors, we need to focus on facts. Evaluate probabilities and place high likely low-risk bets.
As much as all these stories talk about Silver (XAGUSD:CUR) and iShares Silver Trust ETF (SLV) as well as the Sprott Physical Silver Trust (PSLV) going up in their sum, they try to fool investors by keeping them on the sidelines since they introduce doubt. While prices trade sideways, we think it’s time to buy again.
Here are the facts why there is a higher likelihood for Silver prices to advance:
- A lot of news items attract buyers. Silver is in the limelight.
- Physical Silver prices trade up to 30% over the spot price.
- We had a bullish twelve-month period for Silver prices. Consequently, describing the first leg of a trend. With a high probability of two more legs to be following.
- We see money inflow into the precious metal sector as a whole. These are safe haven seeking investments due to the threat of hyperinflation caused by unprecedented fiscal and monetary stimulus.
- Possible highest ever physical delivery months within this year for Silver futures traded on the COMEX exchange.
Daily Chart of Silver in US Dollars, Good support:
Silver in US Dollar, daily chart as of March 5th, 2021.
Looking at this sideways range, we find ample support of prices within the range right now as a healthy spot to acquire physical Silver. We pointed out that last time around prices touched the simple 200 moving average, Silver prices exploded. We expect a similar scenario now. There is a likelihood that prices might already take off in the upcoming week here from the secondary volume analysis support point (POC=point of control). These stacked up edges of support provide for tighter stops and great risk-reward ratios.
Gold in US Dollars, Monthly Chart, Stacking Odds:
Gold in US Dollar, monthly chart as of March 5th, 2021.
A great way to timing your Silver entry is also looking at inter-market relationships. Once Gold, the sector leader, will find its support, Silver will follow. This technique might help distinguish if Silver will be bouncing from primary or secondary POC in the upcoming week (as indicated in the first chart of this article).
The monthly chart above shows that Gold has entered a prime buy zone between US$1,650 and US$1,700. Both the Fibonacci retracement and the fractal volume analysis demand zone substantiate that fact.
Gold in US Dollars, Monthly Chart, Silver, don’t be fooled:
Gold in US Dollar, monthly chart as of March 5th, 2021.
Another view at Gold reveals that it bounced strongly last time it touched its simple 20 months moving average. It is a confirmation that we might be able to temporarily bottom here and support a possible Silver up move. In such a case Silver might be temporarily topping by mid-August to mid-September this year. At that time, Silver will be ripe for partial profit taking to reduce long-term risk by using our quad exit strategy.
Our thinking is all programmed for a hundred years to benchmark against dollars. I am sure you have noticed your groceries to be more expensive now or better said, everything being more expensive. Maybe thinking the dollar is worth less is a more somber way of perceiving the change. Benchmarking against Silver or Gold or even Bitcoin might be a more accurate measure of value perception. Average monthly wages in Venezuela representing a value of US$6 are an excellent example of what hyperinflation can look like.
If you are holding your wealth in US-Dollars only, you are at extreme risk. We are not too specific on Silver or Gold or mining companies or Bitcoin or land, but we are risk-averse. We urge you to look critically at fiat currency holdings. The risk/reward-ratio of Silver at this time is excellent. Usable as a hedge against this risk!
Silver, don’t be fooled
When you hear from many various sources that Silver “is the thing to buy,” it feels like “too good to be true.” Sound fundamental analysis shows that holding physical Silver is, in fact, a prudent course of action. Silver prices are manipulated. They do not reflect true value. Physical prices trading much higher than the silver spot price Silver (XAGUSD:CUR). Once truth can’t be suppressed anymore, we see a fair likelihood for Silver prices to advance rapidly. Our conservative targets for the Silver market point at annual highs near Labor Day. At that point we aim to take partial profits.
This article was written by
Analyst’s Disclosure: I am/we are long XAGUSD:CUR. 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.