(Kitco News) - February Comex gold futures Friday hit another all-time record high of $4,581.30 an ounce and was climbing as of this writing just before midday. March Comex silver prices hit a new record high of $76.32 just before Midday Friday. The price moves in silver the past few sessions are stunning. Today’s daily price gains in silver (up over $4.50 on the day as of this writing) are more than what the silver market traded at in the mid-1980s, when I started covering the metals. Following are some observations from this 40-plus years metals market participant.
--Silver has gone parabolic in market parlance. That means prices are moving nearly straight up on the daily bar chart. This price action is not sustainable and suggests that a near- to intermediate-term market top is close at hand—from a time perspective but not from a price perspective.
--The popular Relative Strength Index for silver, when overlaid on a monthly continuation chart for nearby silver futures dating back to 1973, shows the present RSI reading of 93.86 at its highest (most overbought) reading since January of 1980, when the RSI hit its all-time record high reading of 98.77. Any RSI reading over 70.0 suggests the market is overdone on the upside and due for a corrective pullback. For perspective, in January of 1980 silver futures hit a then-record high of $50.36. By March of 1980 the price of silver dropped to a low of $15.10 an ounce.
--The RSI for Comex gold futures this week hit an all-time record high of 95.94. The second-highest RSI reading ever for gold was in January of 1980, when the gold RSI hit 94.69. In January of 1980, gold futures prices hit a then-record high of $875.00 an ounce. By March of 1980, gold traded at a low of $453.00—losing around half of its total value in less than three months.
--History repeats itself in human nature and particularly in raw commodity markets. The Relative Strength Index numbers are shooting a major shot across the bow of the gold and silver market bulls.
--I was fortunate enough to spend my early career working on the futures exchanges trading floors in Chicago and New York. It was a great learning experience—especially listening to the floor traders dole out sage wisdom to a young markets reporter. One of the things the veteran traders told me was that when the general media and the general public catch wind of a markets development that has been playing out for some time—that’s a solid signal that the market event is close to climaxing. Earlier this week I was contacted by general media outlets ABC News and National Public Radio regarding the strong price gains being posted in gold and silver. Indeed, it appears a whole lot of gold and silver traders are now on one side of the boat—and especially the retail trading public.
--The above bullet points are bearish warning signals for gold and silver traders. Here is a bullish element that has likely occurred: Gold and silver prices have moved to new plateaus that will act as price floors for many months or even many years to come. Of course, nobody knows but I’m suggesting the new major price floor for gold is $3,000. Just one year ago, in December of 2024, the price of gold was around $2,700.00. I’m suggesting the new major price floor for silver is $45.00-$50.00. One year ago the price for silver futures was around $30.00 an ounce.
