After waiting for seven years since the price of silver traded above $30, precious metals investors are wondering if 2019 will be the year that shiny metal finally enters into a new bull market. However, for silver to enter into a new bull market, certain signs and indicators need to take place. I discuss this in detail in my latest video.
Interestingly we have seen several precious metals analysts suggest that something quite interesting is taking place in the silver market. For example, Alasdair Macleod wrote an article, A Whale Is Accumulating Silver Futures, implying that the Chinese government may indeed be acquiring a significant long position in the silver market. Macleod believes China may be going long silver, via the futures market, to protect its supply by hedging as the price heads higher in the future.
So, how can we tell if silver is entering into a new bull market? Well, the biggest indicator tends to be the price. While physical supply and demand factors impact price, we have seen years in which demand fell during rising prices, but also surged during extreme selloffs. Thus, it’s important to look for key price levels that will signal that silver has begun a new bull market.
The silver price has been impacted by fundamental and technical analysis. As I have mentioned in recent articles, I dismissed technical analysis for years as I thought it was nothing more than reading tea leaves or goat entrails, as a commenter stated. However, after I spent the past year watching and studying the day trading markets, I realized that stocks were bouncing off moving averages, technical levels, and formations… DAY IN AND DAY OUT.
When I went back and looked at the long-term gold and silver charts, I saw that the large price BREAKOUTS occurred at certain key levels. Why was this the case? Well, it seems that when the gold or silver price broke above a key level, it came on the RADAR of traders, hedge funds, investors, and institutions. Thus, breaking above or below these key levels brings on a great deal more interest and trading volume.
When the gold or silver price finally pushes above a long-term resistance level, EVERYONE WANTS IN. And, it’s not just in gold and silver. The market pays attention to these key levels IN ALL STOCKS & COMMODITIES.
So it’s essential to understand that while the fundamentals are the underlying drivers of price, the key technical levels provide the BIG PUNCH or huge increase in BUYING or SELLING depending on the technical setup. I ignored this information for years, but will no longer.
Does that mean that I am no longer interested in fundamentals? Hell no. I am interested in the fundamentals more than ever. However, technical analysis will provide us some with clues as to how silver will BREAKOUT to new highs in the future. Furthermore, when the U.S. and the world experience peak oil, the impact on most assets will be quite negative. BUT… this will be shown in the charts as Stocks, Bonds and Real Estate lose value while gold and silver move up in the opposite direction.
In my newest video, SILVER PRICE BREAKOUT: Key Levels To Look For In 2019, I explain in detail how the past silver price spikes occurred at crucial technical levels and will do so again in the future:
The key technical levels are important to keep an eye on because the PAPER BUYER or SELLER drives the majority of the silver market price. This shouldn’t be a surprise because only 1% or less, of investors, purchase physical gold and silver.
One of the charts I discuss in the video is the long-term silver chart with two crucial moving averages and the important lower trend line:
In the 20-year monthly chart of silver, the price has been bouncing off the lower rising trend line (blue dashed line) since 2004. Not only is this an important technical level for silver, but it also shows a BOTTOM for the price as $15 is now the average cost to produce an ounce of silver by the primary mining industry. If we go back to 2004, the primary silver mining industry was producing silver at about $5 an ounce. Thus, the cost to produce silver has tripled in 15 years… AND THE TECHNICAL LEVELS SHOW IT.
Lastly, I explain why the silver price must push above these two moving averages to be in a new bullish trend. However, for silver to be in a NEW BULL MARKET, I believe there is a certain key price level that it needs to rise above.
About the Author:
Independent researcher Steve St. Angelo started to invest in precious metals in 2002. In 2008, he began researching areas of the gold and silver market that the majority of the precious metal analyst community has left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.