Silver Is Preparing To Surprise

London (Apr 18)  The price of silver has gone to sleep, and the precious metal is like a hibernating polar bear in summer these days. However, anyone who has bought or sold silver since the late 1970s knows that when the metal awakens, it can be a bucking bronco like no other.

Silver has a long history of surprising, or even shocking market participants when it comes to price volatility. The price of silver can rally far beyond that fundamental and technical analysis projects, and it can fall far below what seems reasonable, rational, and logical at times.

Silver is like a rubber band; during its quiet times, it stretches the patience of market participants to the point where many throw in the towel, abandon positions and look to other markets for opportunities. However, silver tends to move significantly higher or lower when herds of buyers or sellers flock to the market causing impressive moves on a percentage basis on both the up and downside.

While gold has been threatening to challenge its 2016 high at $1377.50 per ounce and was trading at just $30 below that level on Monday, April 16, silver was miles below its peak from two years ago. In July 2016, silver traded to a high of just over $21 per ounce and these days, it is almost $4.50 lower. Moreover, silver has traded at a median level of 55:1 versus gold over the past four decades. With the yellow metal at the $1346 level, that would imply a price of just under $24.50 per ounce, and silver is almost $8 per ounce lower than that price these days.

Silver is a stubborn metal

Silver can be a stubborn precious metal, and it is not unusual for it to remain in a narrow trading range for long periods.

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