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Silver and the $24 Problem

By Andrew LaneCommoditiesJan 23, 2023 08:46AM ET
www.investing.com/analysis/silver-and-the-24-problem-200634619
Silver and the $24 Problem
By Andrew Lane   |  Jan 23, 2023 08:46AM ET
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Since Sept. 1, 2022, when silver just touched $17.50/oz, it then rallied 37% in three months to hit $24. For the past six weeks, silver has been stuck in congestion and become rangebound. The range has been tight, from a floor at $23 to just above $24.

Silver Price Chart
Silver Price Chart

This congestion typically leads to a big move. It’s a classic bulls vs. bears battle. Who will throw in the towel first?

The good news for the bulls is the fundamentals point higher. The dollar is getting destroyed, interest rates are soon to stall (one of the causes of the former), and physical supply is extremely tight. The bad news for the bulls is that the last two times we have had congestion similar to this, it has ended in a down move.

The $24 level would appear to be an inflection point where the shorts are targeting. It has been attacked several times, and although daily and weekly closes above this level, it has never held firmly. That said, it is perfectly normal to have a pause before a move higher, given the extent of the rally from September.

The Fed rate rise of 25 basis points is well priced into the dollar index and silver. Absent a complete shock, next week’s decision is unlikely to affect the price if it does come in at 25 points. With 55,000 jobs being hemorrhaged. 

Silver and the $24 Problem
 

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Silver and the $24 Problem

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