Physical Silver short term uncertainty, long term hold


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
25.43 (26.34)
↓ 3.5%
Trend ↑ (↓) ↑ (↑) ↓ (↑)
% Risk
Weight
70 (70) 69 (65) 70 (73)
PM Distribution
Total allocation 55% (50%)
Ag:40% Au:30% Pt:30%

Silver/USD live price


Silver comment

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.

31 December 2020: 2020 was a solid year for Silver in more than one way. It is how it behaved again as a mature asset class following the first Covid shock in March. Price from open to close in 2020 is up 48%. Silver dropped sharply again just before Christmnas closing unchanged from the week before and recoved in the final week to close the year at 26.34 and in line with the other precious metals. Even though technicals look a little soft for Silver right this moment, the medium term weekly trend looks very strong and seems to be the leading indicator. We need to see bearish divergence in the weekly time scale to start worrying about a top. Strong Hold, no change.

24 December: The unchanged weekly close just before Christmas with all timescales in fairly neutral risk weight is a positive signal. We had a slight preview last week of what's coming when silver rallied sharply above the 27.00 handle before dropping nearly 10% again. Because Silver is a higher volume speculative commodity we may expect a sharp rally into the higher 30's followed by a sharp correction based on potential medium term bearish divergence in Weekly timescale. A 40% advance from present levels is an objective we have held for some time and it looks this market is building up for just that. 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
72.48 (71.70)
Trend ↓ (↓) ↑ (↓) ↑ (↑)
% Risk
Weight
11 (14) 19 (19) 26 (25)
PM Distribution
Total allocation 55% (50%)
Ag:40% Au:30% Pt:30%

Gold/Silver Ratio live price


Gold Silver ratio analysis

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.

24 December: The Gold/Silver ratio briefly dropped below 70 again, since the earlier drop during September, as Silver enjoyed a very sharp rally early last week. We strongly hold on to our long term forecast to at least reach a more modern times equilibrium between 40 and 60 and with both higher gold and silver prices against all major fiat currencies.



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

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