“Markets are never wrong - opinions often are” ~ Jesse Livermore
Over the past 20 years, I have worked with 100’s of brokers, 1000’s of individuals clients, and seen every type of trader come and go. The most successful traders have had an underlying thesis built behind some market that if timed right has led to riches, however, the recurring theme amongst those that failed had thought their opinions were bigger than the market. Those that succeeded had the patience to slowly build their position using technical analysis and when the market finally shared the same opinion as theirs it was something magical.
My opinion on silver remains the same that once global industrial production recovers from the lockdowns and the markets realize the irreversible monetary damage the Fed has done by aggressively devaluing the U.S. Dollar that will lead to a rush into gold which will ultimately trigger a massive wave in silver. Remember that silver tends to underperform gold when global industrial production is weak given silver demand depends 80% on commercial users and only 20% investment demand, while the ratio is inverse for gold with 20% commercial uses and 80% investment demand.
Before we break down the silver market, we have created a free “Gold Trends Macro Book” which you should print out. This will provide you with all the quantitative analysis on the gold market, therefore, increasing your knowledge of key trends. You can request yours here: Free Gold Trends Macro Book
Remember most silver is produced as a byproduct of copper, gold, lead, and zinc refining, while primary silver production in 2019 was 240.0 million oz and accounted for just 29% of global silver output. The largest component of global physical silver demand was industrial fabrication at 510.9 million oz (52%) of total physical demand in 2019. The next largest component was jewelry at 201.3 million oz (20%), closely behind was physical investment demand at 186.1 million oz (19%), then silverware at 59.8 million oz (6%) and photography at 33.7 million oz (3%).
Looking at the chart above there are two key technical developments I am watching. The first is a potential “bearish” head and shoulders pattern. Before you hear the word “bearish” and throw me under the bus, this is merely a short term (7-14 days) “technical set up” to help us identify what the next move might look like while the underlying “Golden Cross” of the 50 DMA approaching the 200 DMA indicates that a longer-term (multiple months/multiple-year) bull market may be developing.
We have been extensively covering the technical backdrop of the precious metals markets in the Blue Line Futures Morning Express Research Reports so be sure to stay up to date on the developments by registering for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up
Good luck and good trading, Phillip Streible Chief Market Strategist 312-858-7303 Phil@Bluelinefutures.com
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