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Silver has been swinging sideways in a very narrow range for a long time (4 months) and its chart (see below) looks bearish.
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…I’m not a chartist – I prefer facts and data vs dogma and charts, so here’s the data to prove my thesis. I use standard deviations as a percent of silver’s price to determine how volatile silver has been…[and] over the past 4 months…[it has dropped to] 1.7% of its price. This is an extremely low standard deviation.
Here’s what happens next to silver when its 4-month standard deviation is 1.7% (excluding overlapping cases over the past 4 months)…
Click here to download the data in Excel.
Conclusion
This is a medium-term bearish sign for silver. Look at silver’s historical forward returns for the next few months – almost all bearish -but this raises a more important long-term question. I previously thought that gold and silver are in new bull markets. I’m seriously starting to doubt this case.
Perhaps silver is still stuck in a long sideways bear market [and] long periods of low volatility are hallmarks for silver’s historical bear markets. In other words, silver’s volatility shouldn’t be this low if it is in a bull market. All of the above historical signals occurred when silver was in a bear market. None of them occurred when silver was in a bull market.
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Over the years I’ve come to appreciate the selection of articles–often contradictory–that the munKNEE.com site gives us. The fact that they are usually stating polar opposite viewpoints was disquieting at first, but investors need to seriously consider the disparity between evidence that on one hand suggests continued appreciation for equities, while on the other hand there is compelling evidence of an impending crash. Commodities markets are also simultaneously viewed as bullish and bearish. So, what’s a reader/investor to do when commentary reflects such contradictory opinion…and perhaps evidence?
Another thing I’ve noticed is that analysts/commentators seem to omit significant, if not glaring, data from their reports and forecasts. Is this done out of ignorance of market fundamentals, economic data, trends, and stats…or is it done deliberately to make a “chump” equity or commodity look like a “champ”? It’s left me increasingly reluctant to jump on any bandwagon, and to regard most market chatter as hype bordering on fake news. “Buyer beware,” is perennially sound advice.