What Is The Next Move For Silver And Gold?

TREASURY YIELDS DRIVE EXPLOSIVE TRENDS IN SILVER

How do Treasury Yields relate to price action in Silver? The first thing we need to understand is that Silver can rally while Yields are rising or falling. What happens when Yields rise over long periods of time is that Silver will tend to attempt to find support while trending moderately higher. Eventually, if fear subsides in the global markets, Silver may fall in price in the later stages of rising Yields.

As you can see on the Treasury Yield to Silver chart below, Yields collapse in 2008 & 2009, as the Housing Crisis unloaded on the global markets. Yields also collapsed in 2020 as COVID-19 shocked the global markets. In 2009-10, interest rates collapsed and Yields collapsed until late 2013. Silver continued to form a base in 2015~16 as Yields rose and peaked. Near the peak in Yields in 2018, Silver continued to attempt to establish a bottom.

What we find interesting related to this chart is the steep collapse in Yields after the 2018 peak and the recent rally in both Yields and Silver. We believe Yields may stall and begin to move lower – resulting in another rally attempt in Silver and Gold. We believe the recent rally in Yields is a reaction to the deep lows related to COVID-19 and that Silver is representing a price pattern similar to 2008-09 – a deep low, followed by a moderately strong price recovery. Yields could stay low for much longer than many people expect if our research are correct.

If Yields continue to stay near or below current levels, the lowest ever experienced in recent history, then Silver should begin another rally attempt very quickly – possibly within just a few weeks. The question becomes, what would prompt Yields to fall quickly from current levels? Could some type of global credit or financial crisis be brewing again?

COMMODITIES & METALS ALIGN

Last but not least, we want to highlight the correlation between commodities and Silver/metals. When commodities prices rise, in general, Silver rises as well. The Monthly Commodity & Silver chart, below, highlights the rally in Commodities in 2010~2011 as well as the incredible rally in Silver that took place at the same time. Now, focus on the hard right edge of this chart and pay attention to the rally in Commodities and Silver that has taken place over the past 12+ months. What is brewing is that Commodities are rallying from a deep bottom that has taken over 9 years to complete. The continued decline in commodities since 2011 has prompted a very strong price recovery attempt after the COVID-19 deep lows. Silver has reacted to this rally in Commodities, like it usually does, to prompt a fairly strong upside price trend.

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