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Unpredictable silver market extra challenging for traders, investors

Kitco News

Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

(Kitco News) - Veteran traders of commodity futures markets know well the old trading adage: "Markets can and will do anything and everything imaginable to frustrate the largest number of traders." Silver is especially good at such. Reason: It has the luxury of acting like a safe-haven asset on some occasions, and acting like a risk-off industrial metal on other occasions, with nobody able to predict which personality the metal will exhibit at any given time. That's why it' extra important for silver traders and investors to examine charts for clues on future price direction.

The weekly continuation chart for nearby Comex silver futures favors the bearish camp. Prices have been trending down for 11 months, from the February 2021 high of $30.35 an ounce. It will take a price move in nearby silver futures back above major psychological resistance at $25.00 to get the bulls charged up, from a longer-term technical basis.

The monthly continuation chart for silver futures is more neutral, showing price action the past several months being mostly choppy and sideways. A drop below longer-term chart support at $21.00 would give the bears more longer-term technical power and would also suggest a down-move to the $15.00 area.

Longer-term charts neutral-bullish for gold, but bulls have a potential ace

Combined, the weekly and the monthly charts for silver futures give a longer-term neutral-to-bearish posture for the market. Importantly, however, there is one major fundamental element that has come into play and will likely continue to be in place for at least the next year: continued rising and even problematic price inflation around the globe. History shows that hard assets, including the precious metals, tend to be favored over paper assets, like stocks and bonds, during times of overheated inflation. Silver will continue to somewhat closely follow the gold market, especially during any times of keen risk aversion in the marketplace.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.