The latest silver price forecasts, predictions and analysis of trends in the silver market.
Silver expert David Morgan provides his outlook for silver in 2024, including the main catalysts he sees driving demand.
David also discusses platinum, palladium, copper, and other commodities he thinks will outperform as we move into the New Year.
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Silver has just witnessed a rare false breakout. A false breakout is when a market overcomes a defined level of selling pressure, only to fail to hold above that level following a period of consolidation. The result after a false breakout is often lower prices; however, context is key, as the market should only be expected to fall to the next visible support level.
In this article we will highlight silver’s recent false breakout, the expected support level it should decline toward, and the price trajectory pending following the summer low.
We will refer to the chart below in the following discussion:
Note the clear resistance boundary of sellers (blue) which have emerged at lower and lower price intervals, following the 2021 peak in silver.
No matter the reasons for their selling, whether legitimate or manipulative, these entities have chosen to exit their silver positions at incrementally lower prices over the last two years. This forms the resistance boundary of sellers.
Note how in April of this year, silver briefly exceeded the resistance boundary of $24.00 for several weeks (red callout). It appeared that buyers had regained control of the market, that sellers had dried up, and that a new trend of higher prices was on its way.
However, within several weeks the steadfastness of these buyers waned, and sellers emerged once again, sending prices back below the former resistance boundary. This is what we call a false breakout.
False breakouts can be catastrophic topping signals if they occur after a prolonged advance.
However, they can also simply be short-term topping signals if they occur within a sideways or declining trend.
In all cases, context is key.
In the case of silver, prices have been trending lower for the last two years. Thus, the false breakout is not taken to be a sign of a major long-term top forming; the signal should instead be representative of an intermediate-term top.
How low should silver be...
The price of silver remains mostly the same regardless of which country you are in. This is because the price of silver is pegged to the US dollar. Therefore an accurate silver price prediction will similarly apply to silver prices in all countries.
In general silver has an inverse relationship to the US dollar. When the dollar becomes weaker, silver prices tend to go up. This is why the state of the economy and central bank monetary policy play such an important role in forecasting silver prices.
The gold-to-silver ratio is used to determine how many ounces of silver it takes to buy an ounce of gold. When this ratio is under 40, silver is determined to be overvalued. When this ratio is over 75, the price of silver is considered undervalued and therefore may be a good time to buy.
The gold/silver ratio is higher now (over 90) since the 2008 financial crisis. It is not surprising, therefore, why so many silver price forecasts are predicting a historic rally in silver prices. It is when this ratio reverses that silver prices take off and outperform gold.
Silver goes through periods of volatile ups and downs but also periods of quiet just like other commodities. Silver does, however, have a history of being much more volatile than gold. This is due to its much smaller market and lower market liquidity. Those investing in silver should therefore be prepared for this volatility. The most important focus when investing in silver should not be the short-term but longer-term trends and forecasts.
Silver, and gold, can be held in an IRA account. However, be sure to first reach out to a reputable broker, understand the guidelines, and be sure to use an approved depository. This can be an excellent strategy for protecting your retirement from a volatile economy.
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