Best of the Week
Most Popular
1.Canada Real Estate Bubble - Harry_Dent
2.UK House Prices ‘On Brink’ Of Massive 40% Collapse - GoldCore
3.Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - Nadeem_Walayat
4.Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - Marc_Horn
5.5 Maps That Explain The Modern Middle East - GEORGE FRIEDMAN
6.Gold Back With A Vengeance As Bitcoin Bubble Bursts - OilPrice_Com
7.Gold Summer Doldrums - Zeal_LLC
8.Crude Oil Trade & Nasdaq QQQ Update - Plunger
9.Gold And Silver – Why No Rally? Lies, Lies, And More Lies - Michael_Noonan
10.UK Election 2017 Disaster, Fake BrExit Chaos, Forecasting Lessons for Next Time - Nadeem_Walayat
Last 7 days
Warning: The Fed Is Preparing to Crash the Financial System Again - 21st Jul 17
Gold / Silver Shorts Extreme - 21st Jul 17
GBP/USD Bearish Factors - 21st Jul 17
Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing - 21st Jul 17
Is It Worth Investing in Palladium? - 21st Jul 17
UK House Prices Momentum Crash Threatens Mini Bear Market 2017 - 21st Jul 17
The Fed May Show Trump No Love - 20th Jul 17
The 3 Best Asset Classes To Brace Your Portfolio For The Next Financial Crisis - 20th Jul 17
Gold Stocks and Bonds - Preparing for THE Bottom - 20th Jul 17
Millennials Can Punt On Bitcoin, Own Safe Haven Gold For Long Term - 20th Jul 17
Trump Has Found A Loophole To Rewrite Trade Agreements Without Anyone’s Permission - 20th Jul 17
Basic Materials and Commodities Analysis and Trend Forecasts - 20th Jul 17
Bitcoin PullBack Is Over (For Now): Cryptocurrencies Gain Nearly A 50% In Last 48 Hours - 19th Jul 17
AAPL's 6% June slide - When Prices Are Falling, TWO Numbers Matter Most - 19th Jul 17
Discover Why A Major American Revolution Is Brewing - 19th Jul 17
iGaming – Stock Prices - 19th Jul 17
The Socionomic Theory of Finance By Robert Prechter - Book Review - 18th Jul 17
Ethereum Versus Bitcoin – Which Cryptocurrency Will Win The War? - 18th Jul 17
Accepting a Society of Government Tyranny - 18th Jul 17
Gold Cheaper Than Buying Greek Villas in 2012 - 18th Jul 17
Why & How to Hedge the Growing Risks of Holding Stocks - 18th Jul 17
Relocation: Everything You Need to do for a Smooth Transition Abroad - 17th Jul 17
A Former Lehman Brothers Trader: It’s Time To Buy Brick And Mortar Retailers - 17th Jul 17
Bank Of England Warns “Bigger Systemic Risk” Now Than 2008 - 17th Jul 17
Bitcoin Price “Deja Vu” Corrective Sequence - 17th Jul 17
Charting New Low in Speculation in Gold and Silver Markets - 17th Jul 17
Bitcoin Crash - Is This The End of Cryptocurrencies? - 17th Jul 17
The Fed's Inflation Nightmare Scenario - 17th Jul 17
Billionaire Investors Backing A Marijuana Boom In 2017 - 17th Jul 17
Perfect Storm - This Fourth Turning has Over a Decade of Continuous Storms to Come - 17th Jul 17
Gold and Silver Biggest Opportunity Since Late 2015, Last Chance at These Prices - 17th Jul 17
Stock Market More to Go - 17th Jul 17
Emerging Markets & Basic Materials Stocks Breaking Out Together - 16th Jul 17
Stock Market SPX Uptrending Again After Microscopic Correction - 15th Jul 17
Global Currency Reserve At Risk - 14th Jul 17
Picking Great Gold Stocks - 14th Jul 17
BBC Tree Expert's Verdict on Sheffield Amey / Labour City Council Tree Felling's - 14th Jul 17
SPX Cycles, Fed Funds and Gold - 14th Jul 17
Should Platinum Be More Expensive Than Gold? - 14th Jul 17
What's Next for US Dollar, Stocks, Bonds and Gold? - 13th Jul 17
India Gold Imports Surge To 5 Year High – 220 Tons In May Alone - 13th Jul 17
Gold and Silver: Your Stomach Is Probably Wrenching Right Now - 13th Jul 17
Gold Industry Is In A Deep State Of Dysfunction, Delusion And Denial - 13th Jul 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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

© 2005-2017 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

Catching a Falling Financial Knife