Silver, Shine On Me

October 23, 2020

If you go to eBay you will find prices for physical Silver to be at least 20% higher per ounce than the spot price. This supply/demand imbalance is persistent now for many weeks already. Imagine the next few months not to be as favorable as typical for the investor at this time of the year. Imagine it not as typically quiet and what this might do to Silver prices. Some speculate a market crash which drags due to margin calls all asset groups down. This might be the case – or not. We find a “wait and see” approach in looking for a cheap spot to acquire physical Silver high risk. Silver, shine on me. Now! A more conservative move. No need to fill the vault if you find prices overbought. But not starting to accumulate the shiny metal in small batches could end up in not getting any at all.

In the modern world, we tend to look for a bargain. In trading, this easily supersedes to even greed. Think again. Think value. You buy a tangible. One of the greatest benefits to have a few Silver coins at home is psychological stability. It feels good to know that you have a barter as a last resort. There are reasons why we have used Silver for more than 2,500 years as a means for exchange. Even if you never have to tap into your backup plan, holding small denomination physical silver is likely for long holding periods, to provide the additional growth in value. It is a good investment for your children and grandchildren. A tangible legacy of you caring and thinking ahead.

Silver, Daily Chart, History repeating itself – Silver, shine on me:

Silver in US Dollar, monthly chart as of October 23rd, 2020

Looking at the monthly chart above, we find that Silver has been trading for long periods in the range between US$14 to US$19. The last time it broke this range to the upside was in the second quarter of 2010. This breakout was preceded by a steep swift move down (A to B) through the whole range with an immediate bounce of 100%.

No different this year. We also broke in the second half of the year through US$19, precisely ten years later and had an identical preceding move. Prices found resistance near the US$31 area (C) in 2010. They have just recently bounced from the same distribution zone (C) as well.

And in 2011 Silver nearly doubled in just three months’ time (E). Probabilities show that Silver could experience a steep move like this in the present time as well. You do not want to get caught of having to act reactionary in a steep leg like this chasing a possibly dwindling decline in the shiny metal.

Silver, Daily Chart, Range contraction before election:

Silver in US Dollar, weekly chart as of October 23rd, 2020

The weekly time frame shows Silver prices in a directional advantage with a bullish triangle formation. After a price advance up to US$30, a natural decline from extended standard deviation levels (dotted lines) occurred over the last 11 weeks. There is a good probability for a price decline breaking through the green support trendline. A fractal zone of support and the Fibonacci support levels of 0.618 and 0.5 are below for a possible bounce. Breaking in the direction of the trend could catapult prices quickly by a 20% increase from US$25 back to US$30 again.

Silver, Daily Chart, Stuck in a tight range:

Silver in US Dollar, daily chart as of October 23rd, 2020

The daily chart shows two predominant factors. For one, a volume analysis indicates a strong support zone at US$24.15 (green horizontal line). And secondly, the round number of US$25 is significant resistance (red horizontal line). Especially this week’s trading was dominated by US$25 acting as a magnet to price. The indecision aspect of price on this smaller timeframe with no clear resolution for direction does not provide for an anticipated low-risk entry point. As such, letting price behavior guide the trader first for the possible breakout direction is the sensible course of action.

Silver, shine on me

We see value flowing from paper money to tangibles. Have you noticed the construction boom around you? Who is going to live in all these buildings? We noticed the used car market to have increased on single-vehicle base prices by an unusual percentage. If odd outside markets like these find an imbalance at their supply/demand ratios couldn’t it be concluded that a haven as obvious as Silver might not likely see bargain values right now? You might see high volatility in spot prices soon, but that doesn’t mean you will be able to stock up on physical Silver for cheap.

We post real time entries and exits for the silver market in our free Telegram channel.


US silver mining began on a large scale with the discovery of the Comstock Lode in Nevada in 1858.

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