Silver long term peak way ahead | 15 Jan 2021


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
24.73 (25.43)
↓ 2.75%
Trend ↑ (↑) ↓ (↑) ↓ (↓)
% Risk
Weight
69 (70) 66 (56) 39 (70)
PM Distribution
Total allocation 55% (50%)
Ag:40% Au:30% Pt:30%

Silver/USD live price


Silver comment

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.

8 January 2021: The March 2020 irregular bottom, from a technical point of view, was part of severe correction in the trend that started in Dec 2015. We have yet to see bearish divergence across our primary technical indicators in the Weekly and Monthly time scales. Silver therefore looks historically bullish.
The first full week trading shows a monthly trend change from down to up. The short term picture is mixed and neutral so we stick to our historic most likely scenario. Up!. No Change.

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

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
73.81 (72.48)
Trend ↓ (↓) ↑ (↑) ↑ (↑)
% Risk
Weight
12 (11) 26 (19) 60 (26)
PM Distribution
Total allocation 55% (50%)
Ag:40% Au:30% Pt:30%

Gold/Silver Ratio live price


Gold Silver ratio analysis

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.

8 January 2021: The upturn at the end of the week is a result of the common higher volatility in Silver. All short term Daily indicators are pointing up which is likely to generate a longer pause towards equilibrium. The 69.00 bottom in August was approached this week but not breached The bigger long term picture that calls for higher PM prices is a reason not to be immediately concerned. From a pure trading point of view one could switch 30% from Silver to Gold or Platinum withg a view to return to the current precious metals distribution level. We will not change our current distribution as the long term outlook calls for a much stronger bullish signal, such as a bullish price (much lower ratio) to risk weight (higher low risk) divergence. No Change.>31 December 2020: The Gold Silver ratio closed the year at 71.70, a net fall of 15% against the January open at 84.50. Looking at the Weekly medium term trend the 125-130 peak now seems a long way back with our initial potential target of 64 rather nearby. RSI, MACD and Stoichastic remain in longer term downtrends providing support for our slight overweight silver position. No Change.



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

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