Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
Bifurcated US Stock Market - 29th Apr 17
Damn the Deficits, Huge Trump Tax Cuts Ahead! - 29th Apr 17
Gold Hostage to Stocks - 29th Apr 17
Warren Buffett Hates Gold… But Here’s Five Reasons You Need To Own It - 29th Apr 17
Stock Market Sentiment, Re-Fueled Along the Way - 28th Apr 17
Calling out the Central Bankers - 28th Apr 17
Fed's Third Inetrest Rate Hike and Gold - 28th Apr 17
USD/CAD - Invalidation of Breakout or Further Rally? - 28th Apr 17
What Happened to the Stock Market Crash Experts Were Predicting - 28th Apr 17
Earth Overshoot Day - Human Population Growth - 28th Apr 17
Misunderstanding GDXJ: Why It’s Actually Great News For Junior Miners - 28th Apr 17
What Makes Bitcoin Casinos So Remarkable? - 28th Apr 17
Financial Markets Improvised Explosives - 27th Apr 17
More Stock Market Short-Term Uncertainty As Stocks Get Close To Record High - 27th Apr 17
Elliott Wave Theory: Is Elliott’s Theory Enough? - 27th Apr 17
Billionaire Investor Paul Tudor Jones Says Stock Market Valuation Is “Terrifying” And He Is Right - 26th Apr 17
The Great BrExit Divides - Britain, USA and France - 26th Apr 17
10 Facts That Show Our Taxes Are Worse Than You Thought - 26th Apr 17
What Trump’s Next 100 Days Will Look Like - 26th Apr 17
G20: SURPASSING THE 2nd GLOBAL STEEL CRISIS - 26th Apr 17
What A War With North Korea Would Look Like - 25th Apr 17
Pensions Are On The Way Out But Retirement Funds Are Not Working Either - 25th Apr 17
Frank Holmes : Gold Could Hit $1,500 in 2017 Amid Imbalances & Weak Supply - 25th Apr 17
3 Reasons Why “Spring Forward, Fall Back” Also Applies To Gold - 25th Apr 17
SPX may be Aiming at the Cycle Top Resistance - 25th Apr 17
Walmart Stock Extending Higher - Elliott Wave Trend Forecast - 25th Apr 17
Google Panics and KILLS YouTube to Appease Mainstream Media and Corporate Advertisers - 25th Apr 17
Gold Price Is 1% Shy of Ripping Higher - 25th Apr 17
Exchange-Traded Funds Make Decisions Easy - 25th Apr 17
Trump Is Among The Institutionally Weakest National Leaders In The World - 25th Apr 17
3 Maps That Explain the Geopolitics of Nuclear Weapons - 25th Apr 17
Risk on Stock Market French Election Euphoria - 24th Apr 17
Fear Campaign Against Americans Continues Nuclear Attack Drills in New York City - 24th Apr 17
Is the Stock Market Bounce Over? - 24th Apr 17
This Could Be One Of the Biggest Winners Of The Electric Car Boom - 24th Apr 17
Le Pen Shifts Political Landscape- The Rise of New French Gaullism  - 24th Apr 17
IMF Says Austerity Is Over - Surplus or Stimulus - 24th Apr 17
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17

Market Oracle FREE Newsletter

Why 95% of Traders Fail

Silver COT Paving Way for Sustained Upside Breakout Sharp Rally

Commodities / Gold and Silver 2016 Feb 07, 2016 - 01:03 PM GMT

By: Clive_Maund

Commodities

Like gold, the bearmarket in silver should be brought to an end by the dollar breaking down, and especially the powers that be resorting to massive global QE in a last desperate effort to beat back the forces of deflation caused by gargantuan debts that are strangling the life out the world economy. Since you cannot beat the problems caused by debt by creating more debt, the end result of this will be the ruin associated with hyperinflation - and you don't to be a genius to work out what will happen to the prices of both gold and silver when that happens. The timing of the launch of the big global QE program will determine when gold and silver really take off in a big way, but it cannot be far off.


Taking things one step at a time we are now going to look at the ground in front of us, and consider the immediate prospects for silver. Silver has broken higher in recent weeks, but its progress has been muted compared to gold. This is normal in the earliest stages of a bullmarket when gold takes the lead. On its 6-month chart below we can see that it has now broken out of a quite sizeable intermediate base pattern, as expected and predicted in the update Imminent Dollar Shock and Effect on Gold, Silver & Oil, after which we went for leveraged silver bull ETFs. It should have some way to go before the current rally fizzles out in the vicinity of its still falling 200-day moving average and it then consolidates or reacts back, with an outside chance of it breaking out of its major downtrend shown on its 5-year chart presented further down the page without further ado and storming ahead, since a clear breakout from this downtrend would likely trigger a possibly dramatic spike.

Silver 6-Month Chart

The 5-year chart for silver looks encouraging as it shows the price locked within a giant Bullish Falling Wedge downtrend which is now closing up, making a breakout likely, with the dollar's breakdown of recent days increasing the chances that it will happen soon. The only circumstance in which this pattern could break to the downside would be if the Fed obstinately presses ahead with more rate rises, triggering a widespread collapse. However, this looks unlikely, especially given the NIRP message telegraphed by Japan last week, which is believed to be a deliberate plot to prepare the ground for the Fed to back out of its projected rate rises. That is why the dollar has plunged.

Silver 6-Year Chart

The following silver over gold chart shows how it has underperformed gold for a long time as the bearmarket has unfolded, which means that once a new bullmarket does start, silver will have quite a bit of catching up to do. Putting that together with its higher leverage as an investment, and you will readily see that silver and silver related investments are going to be the place to be once this sector turns higher.

Silver:Gold Ratio 6-Year Chart

The latest silver COT shows readings in middling ground with scope for further gains by silver, and we will watch out for Commercial short positions rising to more extreme levels as a sign that we may be at or close to an intermediate top.

Silver CoT

Silver's optix or optimism chart is also in middling ground, but any further gains by silver will doubtless see readings on this chart rise to levels that call for an intermediate top, to be followed by consolidation or reaction.

Silver Optix
Chart courtesy of www.sentimentrader.com

In conclusion, the picture for silver appears to be brightening considerably, with the prospects for an upside breakout from its long and stubborn downtrend brightening considerably. Ideally, what we would like to see is a little more upside progress, and then a period of consolidation or minor reaction that allows COT readings to improve, paving the way for a sustainable upside breakout that triggers a sharp rally.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2016 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

© 2005-2016 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