What Is The Next Move For Silver And Gold?

brass metal frame

Gold continues to wallow near its recent low price level, near $1765. Silver has continued to trend moderately higher – but still has not broken out to the upside. Many analysts have continued to estimate when and how metals will begin the next wave higher. My research team and I believe we’ve found some answers to these questions and want to share our research.

SILVER EXPLODES IN LATE-STAGE EXCESS RALLIES

The first thing we want to highlight is that Silver tends to rally excessively in the later stages of any precious metals rally. For example, in mid-2010, Silver began an incredible upside price rally after Gold rallied from $720 (October 2008) to $1265 (June 2010). This suggests that the price relationship between Gold and Silver “dislocated” in the early stage breakdown of the financial markets near the peak of the 2008-09 Housing Crisis Peak. Then, in late 2010, Silver began to move dramatically higher while Gold continued to push an additional 80%+ higher.

The Silver rally in 2010~11 is clearly evident on this Silver/Gold Weekly chart, below.  The lack of any Silver price advance compared to Gold prior to the 2010 rally is also evident. One interesting fact relating to how Silver reacted to the 2008~09 Housing Crisis is the deep collapse we see on the left edge of this chart. A similar collapse happened just recently as COVID-19 shocked the global markets in 2020. 

One key aspect we found very interesting is how Silver recovered moderately slowly in 2009~10 before launching into an incredible breakout rally in late 2010 – nearly 15 months after the bottom. Currently, after the COVID-19 bottom, Silver has rallied a bit more aggressively and quickly. While Gold has languished below $1800 recently, Silver has continued to gain value compared to Gold. This new dynamic may suggest the current setup in Precious Metals is transitioning into the late-stage excess rally much quicker than in 2009-10.

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