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…Silver…is experiencing a strong consolidation, leading it to establish a strong and wide sideways range…[The question is whether or not it can maintain its current support level].
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Both the gold and silver markets are tightly controlled by the so-called bullion banks. These banks set prices by being able to create silver and gold on paper, in a similar way that private banks create money through deposits and liquidity reserves. However, this scenario may change radically after the forthcoming introduction of the Basel III accords in January 2022.
This reform will mean that gold in its tangible form will be classified as a zero-risk asset, while paper gold will not have this classification. This means that banks working with this type of product will have to increase their additional reserves, thereby increasing the demand for this type of asset, which could lead to a sharp increase in the volatility of these products, increasing both the price of gold and spot silver.
Price of Silver At A Critical Point
If we focus on silver, during the last few weeks we can observe that the price has been following a bearish channel, which has led it to momentarily break downwards through the important support level represented by the red band…The current price is at a critical point because the loss of this important support level could open the door to a further pullback in search of its next support levels at $19.655 and $18.847 per troy ounce.
- While on one hand, it is true that if the aforementioned forecasts are fulfilled, these could be a good point to consider long positions,
- on the other hand, in order for the price to experience an upward momentum in the short term, it is important that it is able to maintain its current levels
- and, as long as it does not break its important bearish channel, we cannot expect much upside.
Editor’s Note: The original post by Roberto Rojas has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
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