Silver 6 months struggle may last a bit longer


Silver Price Forecast relative to Long Term Monthly (LT-M) - Medium Term Weekly (MT-W) - Short Term Daily (ST-D) - and Hourly (not shown) data.

SILVER FORECAST

(Previous week in brackets)

Silver/USD LT-M MT-W ST-D
25.42 (24.73)
↓ 2.75%
Trend ↓ (↑) ↓ (↓) ↑ (↓)
% Risk
Weight
50 (69) 48 (66) 70 (39)
PM Distribution
Total allocation 55% (50%)
Ag:40% Au:30% Pt:30%

Silver/USD live price


Silver comment

22 January 2021: After reaching an intermediate high at $30 in August, Silver has been struggling with quite a bit of volatility. This may continue for a bit longer because of traders disappointment as the market is not doing what many silver bulls have been predicting for this calendar time frame. It may also suffer from increased interest in crypto which has offered substantial opportunity and still does. Silver however remains our favorite Precious Metals allocation as it needs yet to manifest a real trigger to call a longer term peak. Our next call is the 37 handle from what ver low this may be reached. Timing wise we would expect this to happen in the next medium term cycle or within 3-5 months. No Change to our long term outlook.

15 January 2021: Silver/US$ is in the process of developing another complex corrective pattern. Our longer term objective however needs to be confirmed by a strong price development upward in combination with a slowing and higher risk weight. We best compare the technical status to that of 2006/7 but with a much more positive looking 6 months sideways price pattern. Volatility in Silver is a known phenomenon partly caused by manipulation from major stakeholders. It means price could even drop below the 21.00 support level or reverse back into the uptrend that started in March. No change.

Silver risk analysis - Quarterly chart since 1971

We will update quarterly Silver risk weight on Jan 30.
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.

Silver/USD Quarterly risk chart based on actual quarterly high, low close

Silver/USD Quarterly Risk weight to Price 31/12/2020

GOLD/SILVER Ratio Price Risk Analysis

(Previous week in brackets)

GOLD/SILVER Ratio LT-M MT-W ST-D
72.58 (73.81)
Trend ↓ (↓) ↑ (↑) ↓ (↑)
% Risk
Weight
10 (12) 24 (26) 50 (60)
PM Distribution
Total allocation 55% (50%)
Ag:40% Au:30% Pt:30%

Gold/Silver Ratio live price


Gold Silver ratio analysis

22 January 2021: The short term uncertainty on silver affects the Gold/Silver ratio which is visible from our technical indicators which show the ratio in a neutral position short term (Hourly Daily) and low risk medium term (Weekly turned up) The 70 level is still way above our equilibrium target but one could expect a pause in the current primary downtrend that started at the first Clovid lockdown in March 2020. We could also see a rapid drop into the 65 handle which we last saw in 2014. That seems like ages ago and 65 will likely offer strong intermediate support. A stronger silver than gold scenario looks more likely in a generally stronger precious metals market. No Change, but closely watched.

15 January 2021: The Gold/Silver ratio is in a short and medium term uptrend which may last until the precious metals space returns to the primary uptrend. This could involve another silver scare with the Gold Silver ratio reaching the 80 handle again. Our cushion is sufficient to await a more serious signal before re-allocating part of our silver position. The ratio looks to develop a 6 or 7 months corrective pattern that does not violate the long term expectation of equilibrium nearer 50-60 or lower. Although technically tempting to reduce risk a little bit, the long term opportunity that looms still favors a strong Silver long position. We have yet to witness a serious long term and medium term bottom with bullish price divergence. Patience is sometimes hard. No Change.



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Posted in A - All Financial Blogs | 2021 Forecast, SILVER FORECAST 2021 | EYEFORGOLD.

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