Silver is close to something big
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
There is a sense that we are close to a significant move in silver. The current season since August 2020 till now, is shaping up in a similar manner to the season of August 2019 to February/March 2020.
Silver as well as the stock market peaked in February 2020, and crashed significantly into March.
Below, is a chart of silver (top) and the Dow (bottom):
On the silver chart, I have indicated how the current season is shaping up like the previous season by marking the similar patterns from point 1 to 5.
On both patterns, point 4 came in right at the beginning of the year (2020 and 2021respectively). If the two patterns on the silver chart continue in a similar manner, then we could see silver crash much lower like it did in March 2020.
However, if the patterns diverge, then we could see a move higher that is similar to the the move from about July 2020 (It is often the case that the big moves come when significant patterns diverge). The red and green lines are my feeling of what would constitute a divergence or a continuation of the similarity.
So, a breakout at the green line would signal a divergence, and confirm a big move higher, and a breakdown at the red line would signal a continuation of the similarity, and confirm a big move lower.
The odds overwhelmingly favour a move higher over the next couple of months. I believe the Dow is key to how (and when) it all plays out.
It is significant to note that silver and the Dow has been moving in similar direction at least since 2019. At some point the two are bound to diverge (although they could move together for a while still).
Based on my previous work, silver get its best rallies when the Dow is declining or going nowhere. I believe a Dow crash (top) is what silver needs to really go much higher. The initial part of a Dow crash could shake silver (even this is doubtful given the current state of the silver market), but it will then soon spike higher.
Even the next chart shows that a Dow peak (or crash) is the next piece needed for a sustained silver rally.
We did not get a nominal top in 2020, but could it be this year? The next couple of weeks we are likely to see a resolution. These are crazy times, so expect some crazy moves.
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