Silver dropped 5% then rallied 4% this week | 2 April 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||↓ (↑)||↓ (↓)||↑ (↑)|
|76 (78)||27 (35)||28 (24)|
Total allocation 35% (50%)
2 April 2021 close: Silver took another hit which is not unusual, but given general volatility in financial asset markets, the 5% peak to bottom drop during the week was mild and ending the shorter week with a minor loss at 24.93. The new mkn ths has just started with 2 days of data which caused the Monthly risk weight trend to turn down from a medium high risk, whilst Daily and Weekly risk are at bullish divergence pivots. This potential divergence and the status of Long term monthly risk weight is strong indication that our long term forecast still stands. And that is for a much higher silver price although medium expectation is for Gold and especially Platinum to outperform Silver. No Change. Note that the portfolio mix for all precious metals is down to 35% of total due to a stronger increase in crypto holdings during March.
26 March 2021 close: Silver did suffer more loss than its metal rivals losing 4% during the week. It may take a while longer for silver to resume its supercycle uptrend since medium term risk weight is still pointing south. A possible sharp down move could trigger another rebalance of metals in favor of Silver although the present distribution feels pretty safe long term.
Silver risk analysis
2 April 2021: The quarterly risk chart now ending June 30 2021 has ticked up. Of course we are just a few days into the new quarter, but the present primary uptrend, which in Elliott terms is defined as a 'Cycle' wave, has some way to go. Risk is higher but not at any extreme by the standard of previous advances. How fast price reacts is impossible to predict but this market looks very firm and should not be abandoned, We remain fully committed to holding physical silver at about 10% of the total portfolio.
26 March 2021: The broad long term risk trend for Silver is up, but with the Monthly Gold/Silver ratio in deep oversold range at 4% risk, we could see a bit of a correction, which may even be volatile. Hence some potential caution after a long but sharp silver correction during the past 12 months. It does not change our long term outlook which remains very form, hence a minor adjustment in allocation and only if the hourly Gold/Silver ratio gives that signal the coming week.
GOLD/SILVER Ratio Price Risk Analysis
(Previous week in brackets)
|Trend||↑ (↓)||↑ (↑)||↓ (↓)|
|7 (5)||40 (35)||75 (80)|
Total allocation 35% (50%)
Gold Silver ratio analysis
2 April 2021 close: Gold/Silver rallied to 70.60 on Wednesday before settling at 69,50 into Easter. Both move did not come unexpected as short and medium term risk time scales drove it up with Daily diverging from Monthly, which risk trend did turn up, but divergence caused silver to adjust a little from its present short term weaker position amongst metals. The long term trend of the Gold/Silver ratio is potentially still down but appears to pause which may take several weeks or months in range trading. We also completed the 1st quarter of 2021 and the quarterly Gold/Silver ratio chart below shows entering a low risk percentage, which may also contribute to a price pause after having corrected a full 50% from the Covid peak in March 2020.
26 March 2021 close: The Gold Silver ratio could be in correction a while a longer and some of these daily moves can be quite strong as past experience has proven. We will have to sit this one out especially with Monthly risk weight in low risk territory and looking to turn up. Last week's upturn did cause early bearish short term divergence between Daily and longer time scales near gthe end of the week. That is indicative of a market that wants to test recent lows again 'just' 10% lower. No change in current allocation.
2 April 2021 The Platinum to Silver ratio is important as a technical cross check against the overall portfolio metals distribution. Daily risk hasn't reached extreme or divergence in its own timescale and remains in a general uptrend.
26 March 2021 close: Risk weight dropped during the week and recovered strongly on Friday still well below previous week. The Ratio actually improved to 47.26 which is a bullish signal. Platinum still holds the best papers for some time to come against both Gold and Silver
2 April We expect to see a medium term first consolidation in the 50-60 Platinum to Silver range established in 2017 to 2019. Higher risk with a minor degree of bearish divergence but still in uptrend.
26 March 2021 close: Target ratio is mid 50's in the near future, roughly a 130 dollar Platinum rise versus the same silver price. Long term target is to seek equilibrium at that 50 year average of closer to 85. As a commodity Platinum is still very cheap compared with Palladium whilst in limited supply.
2 April Monthly risk in strong uptrend is a leading indicator whilst Platinum is in the process of making a full technical recovery towards equilibrium.
26 March 2021 close: The Monthly chart shows how early days this recovery is. When we speak equilibrium we could see any level and even much higher as we see on the chart checking the early years of the century. The current level appears simply too low risk to not participate.
2 April Quarterly is an even stronger lead indicator as Platinum/Silver has started the adjustment to long term equilibrium closer to 70. Platinum remains a slight favorite amongst metals, hence our broadly balanced allocation towards Gold, Platinum and Silver.
26 March 2021 close: We are just a few days short of quarter end and the new quarter shouldn't surprise in a negative direction. The bull trend for this ratio has some way to travel, hence the slight Platinum overweight in the precious metals portfolio.