Monday , 6 December 2021

Silver’s Fuse Is About To Be Lit

It would not be surprising if Fed tapering started in early 2022 and became more aggressive during the year… and this could easily be the fire that lights the fuse of the Silver rocket. We now see early signs of such a lift-off in price in recent silver price movements. Silver’s fuse is about to be lit.

This post by Lorimer Wilson, Managing Editor of munKNEE.com, is an edited ([ ]) and abridged (…) version of an article by Korbinian Koller for the sake of clarity and length to ensure a fast and easy read.

Silver in US-Dollar, daily chart, low-risk entry points:

…We like the silver play because gold is in the limelight in its battle with bitcoin allowing for silver to shine while it is typically in the shadow. On top of it all, we find clear evidence that commodities with industrial use are likely in a long term bull market.

This is a play where everything is coming together. A multi-stream both in fundamental and technical edges stack up on each other. As of right now, we have identified four low-risk entry points on the daily silver chart, which are marked in bright green horizontal lines. We would take off 50% of the position near the US$26 mark to mitigate risk (see our quad exit strategy).

Silver in US-Dollar, weekly chart, good risk reward ratio:

The weekly chart above offers a low-risk opportunity as well. We illustrated above a play that assumes an entry point in the lower third quadrant of the yellow marked sideways zone. It would provide for a risk/reward-ratio between 1:1 and 1:2 towards the financing point. As well we assume an exit of half of the position at the top near US$28 of the yellow sideways channel (see our quad exit strategy).

With two more exits of each 25% of total trade equity at targets US$34.83 and US$48.72, we find the weekly play to be conducive to our low-risk policy.

Silver in US-Dollar, monthly chart, favorable probabilities:

With its most considerable weight, the monthly chart provides the necessary overview. It shows how likely a success rate to a long-term play outcome is. We find three dominant aspects supporting our aim for a bullish long-term play.

  1. Trend: The linear regression channel is marked in diagonal lines (red, blue, green). It shows a clearly bullish trend with a high likelihood of continuation.
  2. Support: The Ichimoku cloud analysis provides solid evidence of support to the recently established bullish tone in silver.
  3. Probabilities: Price highs from 1980 to 2011 built a double top price formation. As a result, it prevented prices from getting higher than the price zone marked with a white box. The third attempt of price reaching this price zone nevertheless has a much higher statistical probability of penetrating this distribution zone and allowing the price to go higher.

Silver’s Fuse Is About To Be Lit

…Should the FED indeed raise interest rates to a degree non-reflected in the anticipated market price of speculators and come as a surprise, we might see a stock market decline next year of a substantial percentage. Consequently, this would temporarily drag silver prices down as well…

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One comment

  1. Thanks!
    The Fed mumbles for months about higher rates just to see what the reaction might be if and when it dared to raise rates fractionally. The Fed would like to raise rates to get its maneuvering room back, but zero has been
    the norm for so long that actually paying interest again could look terrifying. At some point the Fed is going to have to bite the bullet, but it doesn’t seem timely to raise rates when the economy is trying to come out of Covid-19 and vaccine set-backs, closures, supply chain disruptions, inflation, and death of the Petrodollar. My logic isn’t Fed logic but mine says that 23 would be the very earliest for raising rates…and even then the physical, mental, emotional,, and financial health of Americans should be carefully considered before taking precipitous action. I appreciate an optimistic article about silver, but I think we’d better be prepared for more of what we’ve seen since 2011.

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