Is Silver Turning?

By The Gold Report

Source: Clive Maund for Streetwise Reports   10/08/2017

Technical analyst Clive Maund discusses movements in the silver price.

The last Silver Market update almost a month ago called the
intermediate top within a day, as you may recall, and it has back to the
extent predicted in that update.

There was more evidence of a turn in silver than gold on Friday, when a
more obvious reversal candle appeared on its chart. On the 6-month chart
we can see that a long-tailed candle occurred that approximates to a
bull hammer where the price closed not far off the day’s highs on the
biggest volume for over a month. After its recent reaction this
certainly looks like a reversal, especially as the downtrend channel has
been converging. The earlier overbought condition has more than fully
unwound and the price has dropped back into a zone of support.

There was an even more pronounced reversal candle on Friday in silver proxy iShares Silver Trust. . .

Like gold, silver is marking out a giant Head-and-Shoulders bottom
pattern, but in silver’s case it is downsloping as we can see on its
8-year chart below, which reflects the fact that silver tends to
underperform gold at the end of sector bear markets and during the early
stages of sector bull markets. Prolonged underperformance by silver is
therefore a sign of a bottom. This chart really does show how unloved
silver is right now, but although the price has drifted slightly lower
over the past several years, volume indicators have improved, especially
this year, a positive sign. A break above the neckline of the pattern,
the black line, will be a positive development, and more so a break
above the band of resistance approaching the 2016 highs. Once it gets
above this it will have to contend with a quite strong zone of
resistance roughly between $26 and $28. Silver is among the most
unloved of all metals, a situation that is not expected to continue,
partly because silver bugs are manic-depressive and they have been
depressive for a long time, meaning that it surely won’t be all that
long until they are on the rooftops singing Happy Days are Here Again.

As with gold, silver’s COT structure has improved in recent weeks as the
price has dropped, and although readings are still far from levels that
can be described as outright bullish, they are considerably better than
those for gold, which could be a sign that silver is set to outperform
gold at last. . .

Click on chart to popup a larger, clearer version.

Extreme lows in the silver/gold ratio are reliable indicators of
either a sector bottom or they can occur during the early stages of a
sector bull market, as can be seen on the long-term silver over gold
chart shown below, which goes back to late 1997. When a low in this
ratio occurred in 2003, the sector was already in a bull market, but as
we can see, it had much further to run. The next major low followed the
2008 market crash. More recently the ratio plumbed very low levels again
at the end of 2014 and early in 2016, which marked the sector bottom
after the brutal bear market from the 2011 highs. Right now it is only a
whisker above these lows, which is a strong sign that another bull market
is just around the corner.

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.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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Charts provided by the author.