Clive says silver has been singularly neglected and unloved, but he says it is a situation that won’t last much longer. Here’s why…
Silver continues to be a singularly neglected and unloved investment, and has been for years now, but as we will proceed to see, this is not a situation that is likely to continue for much longer.
On its 10-year chart we can see that silver has basically been moving sideways marking out a low base pattern since late 2014–late 2015, following a severe bear market from its 2011 highs. For a while this year it was thought to be marking out a downsloping Head-and-Shoulders bottom, but with the renewed decline from June through late August, it was clear that the pattern had morphed into something else, and on the basis of what we are seeing in other metals, principally copper, gold and platinum, it now looks like it may instead be completing a large Double Bottom pattern, and if this is what it is, then it is very close to the second low of the Double Bottom here, and thus at an excellent point to buy.
On the 6-month chart we can see that the second low of the giant Double Bottom shown on the 10-year chart appears to have taken the form of a tight Head-and-Shoulders bottom. About two weeks ago it looked like a neat and tidy pattern was completing, so the drop early last week came as something of a surprise, but Thursday’s high volume rally was a bullish development that restored the bullish look of the pattern, which at this point looks like an irregular Head-and-Shoulders bottom with two small right shoulders. Interestingly, it stalled out again on Friday at the resistance at the upper boundary of the pattern, showing how important it is, and while it could back off a little bit short-term, it looks like it is getting ready to break out of it.
Thus it is interesting to observe silver’s latest COT chart, which certainly looks bullish as it reveals that the Large Specs remain completely demoralized regarding silver, as they are still short, which is good to know as they always overall wrong.
Although it has eased somewhat in recent weeks, the latest Hedgers chart still presents a strongly bullish picture for silver, as large commercial Hedger’s positions are still historically at a very low level.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.