Best of the Week
Most Popular
1.SNP Offers Labour Deadly Death Embrace Alliance, Holding England to Ransom, Destroy UK From Within - Nadeem_Walayat
2.Gold And Silver – Most Widely Used Currency In Western World? Stupidity - Michael_Noonan
3.Election Forecast 2015 - Coalition Economic Recovery vs Labour Collapse - Nadeem_Walayat
4.Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - Nadeem_Walayat
5.Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It - Mike_Shedlock
6.Leaders Debate Election 2015 - Natalie Bennett Green Party Convincing Anti-Austerity More Debt Argument - Nadeem_Walayat
7.Labour Economic Collapse vs Coalition Recovery - UK Election Forecast 2015 - Video - Nadeem_Walayat
8.China’s Stock Market Mania; How High can Red-chips Fly? - Gary_Dorsch
9.Gold and Misery, Strange Bedfellows - 31st Mar 15 - Dan_Norcini
10.Ed Miliband Debate Election 2015 Analysis - Labour Spending, Debt and Economic Collapse - Nadeem_Walayat
Last 5 days
Q1 Corporate Earnings Risky for Stocks - 17th Apr 15
US Stock Market Getting Scarier by the Day - 17th Apr 15
Stock Market Watershed Day - 17th Apr 15
Gold Price Has “Hallmarks Of Market That Is Bottoming” - 17th Apr 15
Chinese Stock Market - Men Go Mad in Herds - 17th Apr 15
Two Stocks Offering Investors High Yields and Profits - 17th Apr 15
Gold Price Has “Hallmarks Of Market That Is Bottoming” - 17th Apr 15
Chinese Stock Market - Men Go Mad in Herds - 17th Apr 15
Two Stocks Offering Investors High Yields and Profits - 17th Apr 15
King Dollar Hurting Stock Market Corporate Earnings! - 17th Apr 15
Production Declines Hide Bigger Crude Oil Storage Issues - 17th Apr 15
Top Three Takeaways From Today’s OPEC Crude Oil Report… and How You Can Profit - 17th Apr 15
How to Profit from Australia's Healthiest Biotech Stocks - 17th Apr 15
What Is Really Driving Gold Price? - 17th Apr 15
Will Ever More Boomers Selling Retirement Assets Change Investment Prices For Decades? - 16th Apr 15
Won't Be Contagion with 'Grexit' Greece Euro-zone Exit - 16th Apr 15
Sharp Decline in USD/CAD and Its Consequences - 16th Apr 15
Blackstone is like Apple, Google, Hermes, Boeing - 16th Apr 15
The Most Dangerous Financial Headline I've Seen Since the 2008 Crisis - 16th Apr 15
Is Legal Tax Avoidance Extinct in the UK? - 16th Apr 15
Why Russia Will Send More Troops to Central Asia - 16th Apr 15
More Thoughts on the Current Crude Oil Market - 16th Apr 15
U.S. Treasury Secretary Warns Greek Exit Will Cause Enormous Disruption and Hardship - 16th Apr 15
The Hottest New Place to Find Stock Dividend Income in Q2/2015 - 15th Apr 15
How to Escape the Pensions Squeeze - 15th Apr 15
Water Crisis Game Changing Water Revolution - 15th Apr 15
The Drying of California - Corporate Farms Control of Water - 15th Apr 15
OPEC Going Broke, Dumping U.S. Dollars. Is That Good Or Bad? - 15th Apr 15
OPEC Just Confirmed It’s Losing the Oil War - 15th Apr 15
Four Uranium Companies Poised to Profit from the Growth of Nuclear Power - 15th Apr 15
Stock Investing Tread Softly… and Carry a Big Risk-Management Calculator - 15th Apr 15
Crude Oil Price Technical Outlook - 15th Apr 15
Important Bitcoin Price Action - 15th Apr 15
UK House Prices, Immigration, Population Growth and Election Forecast 2015 - 15th Apr 15
Peter Schiff on U.S. Dollars, Drachmas and Debt - Video - 14th Apr 15
The Ultimate Middle East Dilemma: Time For Us To Stop Intervening? - 14th Apr 15
Greece Debt Default and Drachma By End of April? - 14th Apr 15
Coming to Terms With the American Empire - 14th Apr 15
The Ball is in the Stock Market Bulls Court - 14th Apr 15
Tech Stocks Bubble: Different this time? - 14th Apr 15
Stock Market Sixth Sense - 14th Apr 15
Separating Gold and Silver Stocks Saints from the Sinners - 14th Apr 15
Conservatives Bribe Labour Voters by Extending Right to Buy to Housing Association Tenants - 14th Apr 15
Stacking Silver = Simple Solution - 13th Apr 15
Why Markets Ignored Weaker Payrolls - 13th Apr 15
Tory Attack on Ed Milliband Backfires as Labour Takes Opinion Polls Lead - 13th Apr 15
A "Digitalized" Stock Profit Play Mr. Spock Would Love - 13th Apr 15
New Credit Crunch Underway: Can Recession Be Far Behind? - 13th Apr 15
Western Interest in Gold Continues to Decline - 13th Apr 15
Stock Markets Breaking Out Worldwide - Buy the Dips Ride the Trend - 13th Apr 15
Silver Price set up to get Whacked Again - 13th Apr 15
Gold Price Dome Cap, Fall Below $1000 Likely - 13th Apr 15
Stock Market Accumulation or Distribution - 13th Apr 15
BLS Economic Propaganda, Truth – The Cure for Cognitive Dissonance - 12th Apr 15
A Case for Monetary Independence - 12th Apr 15
Drought and the Failure of Big Government in California - 12th Apr 15
Stocks Bull Market Continues - 11th Apr 15
Why the American Consumer Will Never Be Back - 11th Apr 15
End Of Islam, Hinduism And Christianity And Rise Of The Age Of Humanism, Spirituality And The Universal God - Sanadhana Dharma - 11th Apr 15
Gold And Silver Nothing Of Substance Going On. Fiat “Dollar” Controlling? - 11th Apr 15
The Most Dangerous Financial Headline I’ve Seen Since 2008 - 11th Apr 15
Alibaba Pggybank Investment Will Make You a Millionaire - 11th Apr 15
Ghosts In The Machine - Population Growth vs Food Production - 11th Apr 15
Gold-Futures Short Covering Rally - 11th Apr 15
Is Bitcoin Price Going down Some More? - 11th Apr 15
Stock Market Pivotal Events - History is Fact - 10th Apr 15
Gold Price “Going Higher” and “A Big Buy Here” - 10th Apr 15
Oil Price - How Much Longer Can OPEC Hold Out? - 10th Apr 15
Euro-zone Crisis - Germany’s Trade Surplus Is a Problem - 10th Apr 15
U.S. Investors Face a Giant, Historic Stock Market Bubble - 10th Apr 15
Greece, Gold, The Death Of Paper Money And The Modern State - 10th Apr 15
Gold and Silver Expect Lower Prices Once Again - 10th Apr 15
How Easy Money Drives the Stock Market - 9th Apr 15
Who Owns the North Pole? - 9th Apr 15
The Tax Collector’s Puzzle - WAIT: Don't File Those Taxes Just Yet! - 9th Apr 15
Austrian Government to No Longer Guarantees Bank Deposits - 9th Apr 15
Buy Gold and Silver Stocks Before the Bear Goes into Hibernation - 9th Apr 15
EURUSD: Why Recent Ups and Downs Are NOT Random - 9th Apr 15
Five Total Wealth Stock Market Investing Principles to Use Today - 9th Apr 15
U.S. Hegemony and Dollar Threatened By New Chinese Bank - 9th Apr 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Historic Bubble

Silver Price Correction Over, Seasonally Strong September Ahead

Commodities / Gold and Silver 2013 Aug 14, 2013 - 09:58 AM GMT

By: Clive_Maund

Commodities

All the signs are that silver's long correction is now over and that it is beginning a major uptrend. The Commercials have cleared out most of their short positions, for a massive profit of course, meaning that the slate is wiped clean for the game to start over anew. Public opinion and sentiment towards silver remains rotten, which is exactly what you expect to see at a major low, with the investing public at large, having been duly "educated" by the mainstream media, harboring a negative attitude to silver and if anything inclined to short it. Lastly, seasonal factors couldn't be better - August and September are good months for gold which will have a positive influence on silver and September is traditionally the best month of the year for silver by far.


On its 1-year chart we can see that just today, silver broke clear above its 50-day moving average for the first time this year, after breaking out from its steep downtrend last month, and then being restrained in a tight bull Flag for some weeks with the price channeled between the upper boundary of the earlier downtrend and the falling 50-day moving average. This strongly bullish action could quickly lead to a dramatic short squeeze. The big gap between the 50 and 200-day moving averages shows the scope for a rapid recovery back towards the failed major support level at $26, although due to the strength of resistance at and above this level, getting clear above this level is going to be a tough assignment. Today's breakout move was preceded not just by a breakout from the downtrend but also by a substantial improvement in momentum, with the MACD indicator now almost at the zero line.

Silver Daily Chart

Silver's long-term chart reveals that we are at the perfect point for a reversal and a major new uptrend to start, with the price having reacted back to the strong support level shown. Although the price could theoretically drop back further to the long-term uptrend shown, other factors, notably the strong support level just mentioned, make it probable that the new uptrend will start from here. The potential major challenge on the way up will be getting above the strong and clearly defined resistance level at $26 and the red downtrend line shown, which are likely to be coincident when it tries it. Adam Hamilton's recent article "Silver Short Squeeze" details a massive record short position in silver held by futures speculators. If he is right - and I have no reason to doubt that he is - then we are likely to see a phenomenal rally by silver soon as these shorts engage in a panic buying frenzy to avoid being wiped out that could easily blow silver straight through the resistance at $26 like it wasn't there.

Silver Daily Chart 2

The latest COTs for silver remain strongly bullish, with the Commercials having largely flushed out their earlier big short position, for a whacking great profit as usual, while the cowed and beaten Large Specs are largely out and licking their wounds - this is the classic stuff of a major bottom.

Silver COT Chart

The long-term silver COT chart is also strongly bullish, with all readings at or close to cyclical extremes that accompany a major low.

Silver COT Chart 2

Chart courtesy of www.sentimentrader.com

The Public Opinion chart for silver below shows that the investing public hold it in very low esteem, and that has to be bullish.

Silver Public Opinion Chart

Chart courtesy of www.sentimentrader.com

The seasonality chart for silver shows that its best month of the year by far, September, is now close at hand, so it would appear that, taking everything into consideration, silver longs have plenty to look forward to in the near future.

Silver Seasonality Chart

Finally, anyone worrying that the impending interest rate spike will stop silver's ascent should go back to school - that school involving study of what happened in the late 70's. For the benefit of those readers who were in diapers at the time, I'll give you the shorthand version: gold and silver prices rose hand in hand with interest rates. The reason? - interest rates were rising because bonds and Treasuries were plunging, so these investments offered no serious competition to gold and silver - what good are high interest yields if the principal value of your investment is shrinking?

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2013 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014