Silver can do it on its own with just a little bit of help | 5 Febr
Silver Price Forecast relative to Long Term Monthly - Medium Term Weekly - Short Term Daily - and Hourly (not shown) data.
(Previous week in brackets)
|Trend||↑ (↓)||↓ (↓)||↓ (↑)|
|52 (53)||42 (45)||35 (53)|
Total allocation 55% (50%)
5 February 2021 close: Silver ended just a touch lower than on Jan 29 at 26.88 and after a turbulent 14% peak to bottom. The SLV squeeze story probably made many more people aware of the precious metals market in general and Silver in particular. Even though the precious metals market is huge, very few retail investors are interested to stay with it or even acquire a small amount due to relatively high cost of storage and very high trading margins from bullion traders. However, a GME type buy and 'Hodl' operation will not be necessary to wake up the Silver whales. Moving even a small amount of fiat currency into physical Silver today will make that happen if done by enough people around the globe. Silver for wealth preservation purchase is available from refiners and bullion dealers but supply is limited. Physical silver isx best purchased by opening an account with companies or exchange that covers your purchase with an exact of excess amount of physical silver stored relatively cheap and in bulk with the major storage companies. Storing physical metal outside of your own tax jurisdiction is important. Austria, Switzerland, Singapore, Australia and new Zealand are examples. USA, Canada and UK are not favored storage locations for legal and other economic reasons. A little bit of help requires just a few million people to acquire an average of 500 troy ounces and absorb a whole year of production. One year Silver production is about one billion ounces or 27 Billion dollars at this week's silver price. That is 3.3% of TESLA market cap. like Gold, Silver is a likely candidate commodity to restore trust in the world's major fiat currencies. Physical Silver is a Buy and Hold until further notice. No Change.
January 2021 close: This week, the elevated performance appears to be highly speculative and driven by the new wave of anti short selling hedgefunds. Although we are in favor of silver as a long term risk play, WallstreetBet has in a short couple of weeks tripled the number of followers on Reddit, clearly indicating a potential dangerous engagement by non professional 'gold' hunters. People new to the game of investing ready to take on completely unknown risk. This may change the landscape for many markets and deliver the odd surprise. Some will be very lucky. Many will not. We would be very surprised to see the type of market action experienced with GameStop, but it clearly has triggered some nervousness and fresh activity.
We are invested because of our technical tools and history always repeating itself. Conservatively we see medium and long term risk declining into neutral ground without much price change. That is a signal for further future strength in its own right. No Change.
Silver risk analysis - Quarterly chart since 1971
Please visit a previous week comment to view a risk weight silver chart based on actual quarterly high-low-close pricing.
31 January 2021: Silver Quarterly risk weight has advanced towards 85. The more neutral shorter term timescales are likely to be pulled in by the strong quarterly continuation. This is a long term observation and short term corrective patterns will be part of this process. No Change.
31 December 2020: Silver price peaks as seen in the quarterly risk weight chart below tend to show risk levels well into the higher 90's. Current level of 79, in an uptrend, can be expected to see further follow through. As Silver is volatile and almost never ends a period at the high, Dec 31 2020 being an exception, a major price advance during Q1 2021 is unlikely to produce a significant overbought condition any time soon. For example: if Silver reached $40 and closes the quarter at $37, risk weight only increases to 85. If Silver rallies to 50 and closes at 42 risk weight actually declines to 77 on the quarterly time scale. The advance that started in 2016 has some way to go.
GOLD/SILVER Ratio Price Risk Analysis
(Previous week in brackets)
|Trend||↓ (↓)||↓ (↓)||↑ (↓)|
|6 (10)||20 (21)||45 (34)|
Total allocation 55% (50%)
Gold Silver ratio analysis
5 February 2021 close: On Monday 1 Febr Silver speculators started buying in early Aussie trade and this continued deep into the European trading session with Silver/USD just breaking the $30 handle with the Gold/Silver ratio dropping to 62.00 and change. This means Gold/Silver has now reached our initial objective of 65.00 after having dropped more than 50% from the March 2020 high. A nice observation is the opening gap on Monday febr 1 versus the Jan 29 close on an hourly chart. That gap at 68.44 was filled on Febr 2 at 12:00 CET. That gap too has a 99% chance of getting filled. Where to go from here? Last week's strong breakaway rally has caused Daily risk to run up which looks to diverge against Weekly and Monthly risk. Irrespective of the intervention mechanism by bullion banks this larger market move earfly ion the week and subsequent correction into the Friday close on 5 Febr gives a signal for potential Silver strenght later this month. It technically favors an further drop of the Gold/Silver ratio into the lower 50's. Something clearly is cooking and silver is responding for a reason. There is enough historic evidence to not want to play short term movements but wait for more structural developments. This may be many months away. No Change to our slight overweight silver holding in our total precious metals allocation.
31 January 2021 close: The ratio was pushed down to close just below 6 momnths horizontal support at 68.80. All risk weight trends are down in all timescales. The speed of this move was somewhat unexpected and driven by silver market forces that have yet to be better understood. It happened so we sit with our long term view as we get nearer to short term equilibrium at 65. No Change to remain committed to our slightly higher allocation to Silver in the PM portfolio.