Silver/USD building a solid base | 28 August, 2020

Silver/USD	LT-M	MT-W	ST-D
27.53 (26.73)
Trend	↑ (↑)	↓ (↓)	↑ (↑)
% Risk Weight	81 (80)	80 (82)	61 (57)
Allocation	>Pt:20% Ag:45% Au:35% (Total 100%)

We have split our PM forecast blog into the three separate metal sections Gold, Silver and Platinum. The Silver and Platinum sections also show resp. the Gold/Silver and Gold/Platinum ratio analysis. Market comments on Silver prior to July 2020 are on the Gold Blog

28 August:: Silver is consolidating nicely near or above $26.90 which was an important support level between Dec 2010 and March 2013. This also is critical to open up for a next move into the higher 30’s handles. The position still feels solid with silver looking to also advance versus gold. No Change.

21 August:: The huge bullish divergence that showed in most tools in March and which sparked the 150% rally in Silver has not yet developed a medium term bearish picture. Overbought yes, but no historic technical evidence that this is finished. The risk of some blow off top in the nearer or distant future is therefore high and we need to be patient. Besides Silvver really needs to find equilibrium in the Ratio with Gold. No Change staying fully invested.

GOLD/SILVER Ratio	LT-M	MT-W	ST-D
71.37 (72.20)
Trend	↓ (↓)	↓ (↓)	↓ (↑)
% Risk Weight	24 (24)	8 (8)	21 (19)
Allocation	>Pt:20% Ag:45% Au:35% (Total 100%)

Gold/Silver Hourly risk weight is turning down at the 80 level with bearish divergence vs daily and weekly. This increases the chance of the current pause setting up for a further move into the two most recent decades equilibrium nearer 60-65. the 200 Month moving average is currently at 65.50. This would definitely become a shorter term target. Besides, Silver will be part of a monetary reset that cannot be avoided anymore, and could catapult silver towards an even lower modern times historic equilibrium towards 30. No Change in maintaining full allocation.

21 August:: Even though the Gold/Silver ratio looks a little exhausted after the major Covid led blow-off top and subsequent correction, we need to see proper bottoming action in the MT and LT time frames. Risk weight has not yet bottomed hence the risk of a quick move to horizontal support range between 60 and 65 is a serious possibility. If that breaks your next simple chart support is at ratio=35, which was the April 2011 all time high at 49.75 for Silver/USD. A pause in this type of market could take months and partience is the name of the game. Hard but usually rewarding if the typical LT risk weight scenario of a bottom hasn’t yet materialised. No Change.

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