Image Source: Pixabay

---Over the past week, I’ve been emphasizing the significance of the $50 level in silver and monitoring whether it would break above it. On Monday, COMEX silver futures finally broke through $50, only to be temporarily slammed back below it on Tuesday morning in what I believe was an intentional act of price suppression by the bullion banks. 

Fortunately, silver shook off that manipulation and rebounded strongly. I’m publishing this quick update to show where silver stands now and what I expect next.

As a quick reminder to keep our eyes on the prize: silver, both in futures and spot markets, has now officially broken above the critical $50 level. This marks the completion of a six-decade-old cup and handle chart pattern.

Why does that matter? Because it indicates that silver is likely to surge into the several-hundred-dollar-per-ounce range, possibly even 10 times higher to $500 or more! 

I’m extremely excited about this prospect, which is why I’ve been monitoring this setup so carefully.

(Click on image to enlarge)

Now I want to show you the intraday chart of COMEX silver futures so you can see Tuesday morning’s slam below the $50 level and the strong recovery that followed. 

As of this writing, COMEX silver futures are trading at $52.61, a solid margin above $50, which gives me much more confidence that this breakout is real and not a fakeout. I’m both relieved and pleased to see this development.

(Click on image to enlarge)

Next, let’s take a look at the same COMEX silver futures chart, this time on the daily timeframe, to see how much of a margin it closed above the critical $50 level. 

As you can see, it’s no longer just a slight move above that level but a solid close well above it. That’s exactly what we want to see, especially alongside strong trading volume, which indicates that institutional money is backing this breakout.

(Click on image to enlarge)

Next, let’s look at the spot price of silver to see where it stands relative to the $50 level. It’s currently at $53.13, which is a strong margin above that threshold. Combined with the confirmation from silver futures, this is a clear sign that the breakout is legitimate.

For much of the past week, until just the last couple of days, the spot price of silver was trading as much as $2.80 per ounce above the futures price. 

That was highly unusual and reflects a condition known as backwardation, which signals a shortage and a scramble for physical silver.

(Click on image to enlarge)

Finally, let’s take a look at what the Synthetic Silver Price Index (SSPI) is showing us about the current silver breakout. 

The SSPI is the proprietary indicator I use to assess whether moves in silver are genuine or likely to be fakeouts. It has been remarkably effective, including accurately signaling the current silver price surge that began in late August. 

The SSPI is rallying strongly with no signs of weakness, which confirms to me that silver’s breakout above $50 is both legitimate and likely to be sustainable:

(Click on image to enlarge)

Before I conclude, I want to briefly return to the topic of the spread between the spot price of silver, which is primarily determined by trading in London, and the COMEX silver futures price, which is set in New York. Typically, the spot price trades about 30 cents below the futures price.

However, over the past week, a scramble for physical silver in London pushed the spot price as high as $2.80 per ounce above the futures price. 

This kind of extreme spread hasn’t been seen since 1980, during the Hunt brothers’ attempt to corner the silver market.

The unusually large spread between London spot silver prices and New York silver futures prices led to air shipments of 1,000 oz Good Delivery bars from New York to London to take advantage of the risk-free arbitrage opportunity. 

That spread has since narrowed to more typical levels, not because the silver shortage in London has improved, but because COMEX silver futures are catching up to spot prices as American speculators and investors increasingly join the silver bull market.

(Click on image to enlarge)

To wrap things up, silver has officially confirmed its breakout above the critical $50 resistance level, a ceiling that dates all the way back to 1980. This is extremely positive news, especially following the bullion banks’ failed attempt to suppress the breakout. 

Even more significantly, this move completes silver’s six-decade-old cup and handle chart pattern, which points to a long-term price target in the several-hundred-dollars-per-ounce range over the next five to ten years. I firmly believe in that outcome and have positioned myself accordingly.

My personal investment approach focuses primarily on physical silver bullion and the SILJ junior silver miners ETF. Miners are naturally leveraged to the price of silver, and I generally prefer ETFs because, as a macro analyst rather than a stock picker, I value the diversification and lower company-specific risk they provide. 

More By This Author: