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Gold Signalling The Waking Silver Bull

Published 04/02/2024, 04:30 AM
Updated 07/09/2023, 06:31 AM

It is exciting times for those that have persisted in the belief that Silver is going to run higher. I am one of these people, and I have written articles for years on the potential Silver has and the stars are about to align in the white metal’s favour, and here is why. 
Through the bull runs of the precious metals in the past, Gold has always lead the way. Silver waits in the shadows as if to confirm its good to come out and then sprints higher at a faster pace than Gold.
From a chart perspective, when considering the monthly bars, it looks like we are here in Gold’s previous runs having broken above long months of resistance.  

The current position is more powerful however, as we have broken above the handle of the cup that has taken over a decade to form.
Silver – as the Gold inspired lagging indicator has a way to go yet, and when we consider the fundamentals of interest rates on their way down via the Fed’s monetary tightening, industrial demand at record levels, inventories at record lows, and a future demand for Silver with it’s unique solar and conductivity qualities, it should be a matter of time. However Silver has a few hurdles to navigate first.

Many analysts are citing the $26 level as the stumbling block, however whilst this has been historically important, the monthly chart above would suggest we will have issues at $28 dollars/oz, with the last two consistent monthly closes above this level an incredible 12 years ago.
Another problem facing Silver will be the huge naked short positions that have controlled the price of silver for years. However at some point these will have to throw in the towel and cover. From the period of 2019 – 2022 the futures markets charts were consistently showing obvious paper smashes during hours of thin liquidity in Silver (and Gold) . As a chart observer, it’s been a long time since I have seen a targeted smashdown. That’s not to say these days are over, alas may even be more likely as we hit levels where shorts are under pressure, but it is a good sign.
So how do you play this market? Physical is always the best way – if you can’t touch it you don’t own it. Mining shares are also ridiculously cheap comparative to the price of Silver, and are touching all time lows against the historical average price of each. Also to consider is the price of Silver isn’t conducive for mining costs.
Silver is always late to the precious metals bull rally party; however, Gold has broken out and after all these years of patience for Silver bulls and stackers, it seems Silver is very, very close to following. Price targets? If you take the percentages of previous runs in Silver then triple digit Silver isn’t a dream, in fact its highly likely. It won’t happen overnight however, and as we all know in this market, the ride higher will be bumpy, will have rip your face off corrections along the way, but absent a catastrophic change of macro circumstances, the outlook couldn’t be brighter.
Gold and silver have acted as hedges against inflation for years, and have been a recognized store of wealth. Silver, the cheaper option always outpaces Gold in percentage terms. This is the time now to hold both as currency debasement continues, the safe haven of money outside the system is the clever place to store it.  The next few months are crucial, and Silver remains the cheapest and most undervalued commodity based upon imbalances of supply/demand on the planet.  

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