Silver Price Is Stuck In Neutral

November 10, 2018

London (Nov 10)  The silver market is stuck in a rut. Even though gold broke above its short-term technical resistance, silver has not moved to a level that is outside of its trading range since trading down to the lowest level at $13.91 in mid-September. Silver is trading at a twenty-five year low against gold which typically occurs when the prices of both metals are experiencing bear market conditions.

The last time silver traded to its current level compared to gold was in 1993. During that year gold traded in a range from $325.80 to $409.00 per ounce, one-third of its current price level. During that year, silver hit a low at $3.51, and the high was $5.47 per ounce.

Things are very different these days with gold at the $1225 level and silver trading at $14.42 but the level of the price relationship stands as a warning so long as the silver market continues to hibernate.

Silver tends to be a highly volatile precious metal that experiences much higher percentage gains and losses than gold when prices are moving. Silver's volatility is typically 50% higher than gold's, but these days, the price of silver is trading between $14 and $15 per ounce without any indication that it is ready to break out of the trading band. Silver tends to move when market participants least expect it to conquer critical technical levels on the up or downside. Therefore, it is possible that the current period of hibernation is a prelude to a significant move in the price of the precious metal. If we are on the verge of a substantial break to the up or downside in the silver market, the triple leveraged Velocity Shares 3X Long Silver ETN product (USLV) and its complementary product (DSLV) could turbocharge returns when the price of the precious metal decides to break out of its current trading range.

Looking ugly below $14.00

Silver has been making lower highs, and lower lows since the precious metal hit its highest price since July 2014 at $21.095 two years later in July 2016.


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