#Silversqueeze is on hold for a while longer | 26 February 2021
Silver Price Forecast relative to Long Term Monthly - Medium Term Weekly - Short Term Daily - and Hourly (not shown) data.
(Previous week in brackets)
|Trend||↑ (↑)||↓ (↑)||↓ (↓)|
|51 (52)||43 (52)||55 (45)|
Total allocation 50% (55%)
26 February 2021 close: The big Silver squeeze that is keeping so many people's hopes up is the kind of event that may happen for good reason but is unusual and not to be expected to develop like the Dogecoin and Gamestop events. Silver is now consolidating in a wilder range. One week a down trend and the next week up again. If we discard the sharp March 2020 drop, the bottom price range last year was around $18 and Silver is close to 50% up from that level. Silver has come out of the $14-$19 trading range that lasted 7 years. The long term picture from a risk weight perspective is still very positive but we clearly need to accept several of these shorter term price frustrations. Since 2013, we have seen 6 major risk bottoms in deeper oversold ranges. We have yet to see a first major risk top over 90% which is expected at the end of every major cycle. Currently at a neutral 50% level.
19 February 2021 : Silver looks technically bullish trading close to its 2 year support and showing medium and long term risk weight in uptrends at neutral levels. Silver always was a more industrial commodity, which has now become an essential industrial commodity requiring more than full annual production of just under 1 billion ounces. If there is going to be a silver squeeze, it will be a most natural event that shouldn't surprise anyone. Speculators who only buy paper silver products, yet assuming physical risk, will eventually pay the price of divergence between paper and physical. We are getting so much closer to a point of no return. Phyical Silver is a strong patient hold.
Silver risk analysis
26 February 2021: The February month end $26.62 Silver tick on 26th Febr, this precious metal has held so much better than anytime during market turmoil of the past 8 of 9 years. Silver has found new life and its use for EV particularly will be providing long term support. Market behaviour suggest some manipulation but not nearly as much as in prior years and relative price stability also suggest very few naked shorts. If there are any in size they are more likely to be backed by physical. There will be shortage of silver in all major Western and Eastern economies, which eventually will push the price much higher. We stay with our forecast of an attempt to drill through $37 technical resistance and probably in 2021. As cost of trading these physical markets is high we just apply patience with our portfolio. The balanced distribution between Au, AG and PT is a low risk approach.
19 February 2021: The Quarterly chart is in uptrend still, with risk weight at 83%, and appears to be in the type of momentum as seen back in 2004/5. Typically, risk weight is expected to become overbought and then diverge upon a much higher price target. It is still posssible that Silver can outpace Platinum against the current best odds, which only amplifies the need for a more diversified portfolio of precious metals. This chart is telling us Silver has a long way to go potentially.
GOLD/SILVER Ratio Price Risk Analysis
(Previous week in brackets)
|Trend||↓ (↓)||↓ (↑)||↑ (↓)|
|5 (5)||19 (21)||17 (35)|
Total allocation 50% (55%)
Gold Silver ratio analysis
26 February 2021 close: The Gold/Silver ratio down trend is slowing down and we should expect a correction of up to 20% from current level at 65, even though Monthly risk is still in a downtrend at around 5% risk weight. Traders should unwind any overweight shorts in the Ratio. The medium term downtrend is not yet finished and can still push the ratio into a fresh new leg towards the 50 handle. A 3 day break of 62 would confirm this. Investors can hold the balanced metals distribution we have been arguing for some time.
19 February 2021 close: The Gold Silver ratio lost 2 points this week closing at 65.26. The pressure is still on as is evidenced by hourly risk moving up quickly to 75% after reaching a 15% low risk bottom with price at 64.50 on Friday. The recent 62 handle low is a serious pitential trigger level for a multi months pause, although the long term downtrend in play should first develop bullish risk to price divergence to signal a long term bottom. Weekly risk weight is today in such potential bullish divergence position which is why any immediate short term price extensions to the downside may call for a medium term ratio bottom. Any market rumours of certain major players swapping gold to silver at these levels should be taken with a pinch of salt. Major players would already have the position and only looking to unwind some or all of it. A market to closely watch nonetheless. No Change for now.
The Platinum to Silver ratio
26 February 2021 close: Daily risk weight has turned down rapidly without much price change. This will develop bullish divergence versus weekly and come into line with the Long term (Monthly - Quarterly) uptrends. This indicates potential short term weakness of Silver at least relative to Platinum and also Gold. Platinum should be as good as gold, as it has always been, and Platinum also has more commodity use potential as long as Palladium has double its value. That historic correction will also come one day.
19 February 2021 close: The 50 year (1971-2921) average daily close of the Platinum to Silver ratio is 88. This high number relative to Gold Silver is somewhat flattered due to the 200-2008 period with prices well above 100. The 1980's also produced several above 100 Pt/AG ratio's. We may get a short term correction but the Medium and Long term risk weight charts still show unfinished uptrends.
26 February 2021 close: The weekly print appears to be developing some intermedciate bearish divergence. Experience learns that an existing strong Long term uptrend is likely to keep any price pressure to a minimum. Our outlook is for the Platinum/Silver ratio to continue to appreciate towards the 60-70 range.
19 February 2021 close: The Medium term weekly Platinum to Silver ratio risk chart is still up but may develop bearish divergence. The strong Monthly uptrend is likely to keep the upward ratio momentum going a while longer.
26 February 2021 close: Monthly risk weight is still in the early part of a long awaited advance. We may expect this trend to last several months depending on the speed of this natural correction. This technical picture offers a low risk Platinum 'hold'.
19 February 2021 close: A strong uptrend is in place still which justifies maintaining our slightly overweight Platinum hold in the precious metals portfolio.
26 February 2021 close: The current trend paused in Q4 and turned back up following as lower price point. This is a bullish indicator and quarterly risk weight should be carried into the high 80's at least before we see a more serious correction where Platinum loses some ground versus Silver.
19 February 2021 close: The Quarterly risk chart is a little tricky as risk weight shot higher during ther 2016-2020 consolidation, then dropped only mildly before turning up after the Ratio bottomed at around 32 in September 2020.
The 50 year average of the Platinum/Silver ratio is 73.0. We would expect Platinum to perform well versus silver based on the present risk trends, but this may change if silver suddenly gets squeezed or simply takes charge of the precious metals space. We'd be looking for the ratio to reach the 65.0 level prior, but even if the ratio turns down again, which is likely to only happen based on a avery strong silver price and not a much weaker platinum price, the balanced portfolio of 30% Gold, 35% silver and 35% Platinum should continue to perform well as expected.