Not only is silver having a good day today, but it also broke through a KEY long-term technical level. While many precious metals investors do not follow or believe in technical analysis, most successful traders most certainly do. Some technical analysts are suggesting that silver may now start to outperform gold. We will see.
However, this morning I was watching the short-term futures price on Investing.com.The Investing.com silver price is higher than Kitco.com because they are showing the larger traded July Futures month. Thus, Investing.com is showing silver trading above $17.
I encourage members to follow me on my SRSrocco Report Twitter feed. I posted a few tweets on the Short-term silver breakout as it occurred. It’s amazing how the metals trade off support and resistance levels. Here was my first tweet as silver was getting ready for its short-term breakout:
Possible #Silver Short-term Breakout at $16.97
— SRSrocco Report (@SRSroccoReport) May 15, 2020
We will find out in the next 15 minutes. pic.twitter.com/mbJYsZJ4uv
About an hour and a half later, I posted the next tweet on the continued short-term silver breakout:
Short-term #Silver Breakout Occurred, Rested, and Continued Higher.
— SRSrocco Report (@SRSroccoReport) May 15, 2020
Interesting how metals trade-off Key Support and Resistance Levels. pic.twitter.com/RwLVLVvsMx
After silver broke through the RED LINE, it consolidated for about an hour and retested the new support area (BLACK DASHED LINE) before continuing higher. I’ve watched a lot of intraday trading and had a good gut feeling this was going to take place.
While it is nice to see silver trade higher today, I was more focused on the longer-term charts below. The long-term monthly chart for the Dow Jones Index-Silver Ratio shows that an important technical level is the 50 Month Moving Average (50 MA). For the last seven years, the Dow-Silver Ratio has been below the 50 MA. However, that changed today as the spike in the silver price pushed the Dow-Silver Ratio below it for the first time since 2013:
(Click on image to enlarge)
When the Dow-Silver Ratio is increasing, the silver price becomes cheaper in relation to the Dow Jones Index, and the opposite is true when it heads lower. As we can see, the Dow-Silver Ratio fell to a low in May 2011 at 250/1, when silver reached $50 an ounce. Over the next seven years, the Dow-Silver ratio increased and hit a peak of 1800/1 in October 2018.
(Click on image to enlarge)
While technical indicators only provide CLUES as to the future direction of a stock, bond, or commodity, it’s nice to see that silver finally broke below the 50 MA. I edited the chart above because Stockcharts does not provide live prices for Silver or Gold. So, I had to calculate the Dow-Silver Ratio manually and show where it will likely be at the end of the day when Stockcharts updates the silver price. Time will tell if the Dow-Silver Ratio will continue lower.
With the massive money printing and liquidity injections by the Fed, I believe it will be very positive for the gold and silver prices moving forward. Furthermore, with only 2.4 billion oz of total physical gold investment in the world versus between 3-5 billion oz of investment silver, there just isn’t that much to go around when investors finally get PRECIOUS METALS RELIGION…. only at much higher prices (values).
Lastly, if you haven’t watched my newest video update, there’s some important information and data you won’t find anywhere else on the internet:
Video length 00:15:56
Comments
Log in or sign up to join the conversation.