Silver up on wishfull thinking? | 31 Jan
Silver Price Forecast relative to Long Term Monthly - Medium Term Weekly - Short Term Daily - and Hourly (not shown) data.
SILVER FORECAST
(Previous week in brackets)
| Silver/USD | Monthly | Weekly | Daily | |||
|---|---|---|---|---|---|---|
| 26.94 (25.42) ↑ 5.98% |
||||||
| Trend | ↓ (↓) | ↓ (↓) | ↑ (↑) | |||
| % Risk Weight |
53 (50) | 45 (48) | 53 (70) | |||
| PM Distribution Total allocation 55% (50%) |
Ag:40% | Au:30% | Pt:30% | |||
Silver/USD live price
Silver comment
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.
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.
Silver risk analysis - Quarterly chart since 1971
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
GOLD/SILVER Ratio Price Risk Analysis
(Previous week in brackets)
| GOLD/SILVER Ratio | Monthly | Weekly | Daily | |||
|---|---|---|---|---|---|---|
| 68.32 (72.58) | ||||||
| Trend | ↓ (↓) | ↓ (↑) | ↓ (↓) | |||
| % Risk Weight |
10 (10) | 21 (24) | 34 (50) | |||
| PM Distribution Total allocation 55% (50%) |
Ag:40% | Au:30% | Pt:30% | |||
Gold/Silver Ratio live price
Gold Silver ratio analysis
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.
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.