Silver is in a new bull market. As documented in our annual gold forecast the game changing moment was when gold broke through $1,375 in June of 2019. This was instrumental for the entire precious metals space. We confirmed in our silver forecast for 2020 that a new bull market was born, also in the silver market. More importantly, our viewpoint on the silver market is that this new bull market will unfold gradually. Interestingly we believe the bull market will accelerate over the course of the next 7 years. Ultimately silver will clear all-time highs in the next 7 years as we get close to 2026. In this article, we will outline how to play the silver market in the next 7 years. We do so based on a unique insight on silver’s chart that no other analyst has uncovered.

As per Tsaklanos, his 1/99 Investing Principles silver is only wildly bullish 1% of the time on a very long term timeframe. That’s contrary to the belief that silver, the restless metal, is bullish very often. Nothing is further from the truth, and silver’s 50-year chart in this article will make that point.

There is a ‘right’ way to play the silver market, and we believe we have evidence of how to do this in the next 7 years.

Gold leads the way

Our thesis for the precious metals markets has always been this:

1. Gold leads the way in bear markets and in the early phases of a new bull market.
2. Gold is primarily the leading indicator for the entire precious metals space as a bearish trend turns bullish.
3. As a bull market matures silver takes over and outperforms gold. Silver becomes the leading indicator at the end of a bull market.

What do we conclude if we apply the above 3 rules to the ‘events’ of this year on the gold chart? The confirmed break above $1,375 in June of 2019 was the game changer. Not only because it was a textbook breakout, but also because it confirmed the dominant trend at play which is the rounding bottom patter.

The giant rounding bottom over 7 years makes us very excited because it is a very powerful (bullish) formation.

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Leading indicators for the silver bull market

The gold chart setup makes us excited, but the really good news is that silver’s leading indicators confirm this.

InvestingHaven’s research team uses 3 leading indicators for the price of silver.

First, the silver COT report helps us understand (other than the manipulation in the silver market) when the upside potential gets limited. Currently, we interpret the non-commercial net long positions as not extreme. So there is plenty of upside potential.

Note this is not a timing indicator though.

Second, the US Dollar has not been working ‘against’ the metals, especially not silver. We really get concerned once the Dollar starts a major move. Today we don’t see this, so the US Dollar is expected to be supportive on the long term.

Both assets are directionally negatively correlated which means that the long term direction on a monthly chart is what matters, not the day-to-day price moves (which is a major misconception).

Third, the inflation/deflation indicator we track is setting a giant double bottom. The correlation between inflation and silver’s price is directionally positive (on a monthly timeframe).

Especially the last leading indicator has special value and will unleash bullish energy for silver, is what we forecast.

Silver’s dominant trend

The dominant trend(s) are visible on the longest timeframe. Silver’s 50-year chart is the one we use for this.

As seen below silver has explosive potential (green shaded areas). However, explosions only occur as silver (gold) bull markets mature. It is rare to see silver go up explosively, but once it starts it seems unstoppable.

What we learn from this chart is that it is way too early to expect explosive potential from silver. It will come, however, after a few years if the bull market matures, and we’ll get clear signs of this as it happens.

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How to play the silver market

‘Buy the dip’ is the strategy to play the silver market in the next 7 years.

Bull markets start slowly and accelerate over time. The acceleration phase for the silver price is still a few years out.

At this point, we want to reveal this exclusive insight.

As the first ones in the world, we believe to have identified a new rising channel on silver’s monthly chart. The next chart shows with the green dotted lines what this new rising channel may look like. As per silver’s 2019 rally we believe that this pattern is about to become the dominant trend.

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If this is true, and we’ll see confirmations of this along the way, it clearly helps us understand how to play the silver market.

If we apply the ‘buy the dip’ strategy it implies that silver investors can buy the support areas and sell the top of each subchannel.

Silver vs gold vs stocks

Should investors prefer silver over gold? What about precious metals stocks?

First, gold will be the safer option in 2020.

Second, as of 2021, depending on whether silver confirms its new rising channel it is likely that silver will *start* outperforming gold.

Third, after 2021, it will be pretty obvious silver will be the outperformer. However, volatility will also be very high. So we warn readers for sudden and aggressive sell-offs. Buy the dip will become more challenging, hence more profitable.

The joker in the game is precious metals stocks. As explained in our Dow Jones Forecast we expect stocks to be in a bull market as of now. This may imply that precious metals stocks will act strong in the months and years to come. If that’s what investors see on the chart (hint: look at the HUI to S&P500 ratio) it may be best to instantly go for precious metals stocks.

Conclusion

The silver bull market that started in June of 2019, with gold’s breakout, is expected to continue for 7 years. Silver will test all-time highs, not yet in the next few years but rather in 5 to 6 years from now.

In the meantime, precious metals will be bullish. Buy the dip is the strategy we recommend.

Depending on the risk profile investors may look to accumulate the metal and or precious metals stocks. But silver will definitely be the outperformer in a few years from now, just not yet.

Play it right by taking the bull market dynamics and the explosive potential of silver into account, and you’ll be rewarded in the next 7 years!