Gold Market Wire
News, analysis and commentary for gold traders and investors
Silver Market Update
Silver Shows Signs of Life
April 13, 2021 - (Gold Market Wire) - Signs of life are returning to the metals as two of our favorite indicators are flashing encouragement. The first is the classic chart reversal formation, which Silver is showing.
Yesterday the market looked like we were headed to the lower channel marker, today - a completely different story. Such is the stuff of markets - especially when they are choppy. The second marker of encouragement is one of our favorite indicators for resumed bullish action - the Gold/Silver ratio. Right now, it showing a very solid sign that it is heading lower, and we see that as a solid bullish indicator.
Taken together these are very positive signs that we could be setting up for a resumed rally. If we consider these two charts, the point of note that accounts for our renewed bullishness is obvious. Late February marked the failed Silver break-out and the low in the ratio. The current ratio reversal, its March 25 failure to hold, and the back-to-back reversal action compared with yesterday are implying a ratio that could be getting ready to sell-off. That is what we want to see to establish length. We've ben sitting on the sidelines for weeks now, and we've almost entered the market on a number of occasions - but this is the most positive collection of indications so far. The 100-day moving average and the top of the channel are converging, making our job a little easier. Being above $25.00, a technical level of some importance also helps. Could it be that the bears are running our of steam?
All markets, but especially the Precious Metals markets, are designed to frustrate you, wear you out and get you to throw in the towel. Of course, a lot of the time, when you do, that's exactly when the market takes off. But not always. Those who threw in the towel in 2011/12 actually did ok. As long as they got back in a few year later. So, how do you know when to close out and take a long vacation from a particular market? Answer: When the downdrafts get enormous and the fundamentals are not on your side. The sign that everyone missed in 2011/12 was that the bail-out of the banks actually succeeded in the medium-term, and that's why theGold market had to take a dirt nap. The system had been 'saved'. But the reason why the bull market wasn't over was that it hadn't really been saved...it had just been papered over.
As it stands now, the fundamental problem are much more acute. Between a deterioration geo-political system; and a banking system that looks ready to disappear forever, to a United States and Europe that are politically factionalizing, to resurgent inflation across a wide spectrum of commodities (food, lumber and copper), the prognosis is one where confidence is completely lacking. That is the only true fundamental that counts for Gold and we have it in spades.