Silver Price Update
What follows is the latest weekly update I sent to subscribers looking back and looking ahead in the silver market. It begins with the relevant statistics followed by key indicators which I use in the pursuit of the Queen of Metals. I will explain some of these below, but first the gist of the update sent this weekend with minor changes.
NYMEX Silver Spot Price: $19.75 (+$2.03 (+11.4%) on week)
US Dollar Index: 95.63 (+0.10 (+0.1%))
NYMEX Gold Spot Price: $1341.71 (+$26.73 (+2.0%))
Silver Weekly RSI: 79.60 (+8.62) (95 overbought/17 oversold)
Silver Weekly ADX: 31.00 (+3.25) (50 overbought)
RMAR: 1.12 (+0.09) (1.45 overbought)
SLI: 0.83 (+0.09) (1.80 overbought)
GOLD SILVER RATIO: 67.93 (-6.28) (15 overbought)
It was some week for silver by anyone’s estimate. I remember when silver back in the early 2000s jumped nearly a dollar in a day and one popular gold website even changed its name temporarily to the silver equivalent. At the height of the biggest blow off in 2011, we saw a $2 jump in one day just near the top. I expect $4 jumps towards the end of the final, final blow off next decade.
As I said in last week’s update, we may have seen the catalyst for the next surge in the precious metals as uncertainty begins to reign. An 11% jump in the silver price is big by any measure and will confirm the silver bull has finally arrived for many.
The RMAR indicator is now at 1.12, which is still a long way off the main trigger of 1.45. However, as said elsewhere, interesting things happen around the 1.30 level where we have seen silver have a couple of mini blow offs in April 2004 and May 2006 (both over 70% drops). I'll address that issue when we come closer to it in the months ahead. (The RMAR silver sell indicator historically triggers when it reaches above 1.45, but has other uses for intermediate bull stages).
Even gold was left for dust as the gold-silver ratio plummeted to about 68. As the monthly ratio chart below shows, the awaited bull signal will surely come this month unless silver undergoes a major correction. The current value of 68 is currently about 7 below its 20 month moving average (when the monthly gold silver ratio trades completely below its 20 month moving average, a bull market in silver is confirmed).
So, we can now say goodbye to the seasonal silver lows mentioned previously and look to silver to forge higher and challenge that major resistance level at $26. I could not say when it would reach that level. This week saw a rise of $2 which suggests a best time to $26 of about 3 weeks from here.
Of course, we would expect a breather sometime in the week ahead. The daily RSI (not the weekly one above which is for longer term sells) is at 84, but this has gone as high as 95 in previous months. Then again, 84 can go to 95 in a single day.
Anyway, enjoy the ride and as we look to $26 for the first big test (end of update).
In reference to the numbers at the top, some will be bread and butter, such as the silver, gold, US dollar and gold-silver ratio figures. The weekly RSI and ADX values have proven useful as multi-year sell indicators for silver while the RMAR and SLI proprietary sell indicators have a good track record identifying major tops in silver over the last 50 years.
As you may deduce from the current figures, there is no alarm bells ringing on the sell side just now. When they will ring is completely unknown, hence the need to track them on a weekly basis. When the silver market really hots up, they will need to be updated and closely watched on a daily basis.
As you may know, silver’s volatile nature can blindside the investor into selling 30% off its peak as it plummets into a new and prolonged bear market. At such times, the emotions of fear and greed will do you no service, only the emotionless mathematics of proven indicators will help make those cold but potentially profitable decisions.
Further analysis of silver can be had by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain subscription details for the Silver Analyst newsletter. A free sample copy can be obtained by emailing firstname.lastname@example.org.