Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

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

© 2005-2019 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

6 Critical Money Making Rules