While Gold is very close to a major breakout (in price) its strength has not filtered down to Silver yet. Gold is 3% away from a major breakout and comfortably above its long-term moving averages. However, Silver is well below its 2016 high and is currently battling its 200-day moving average. But that is okay. Silver typically lags and underperforms Gold until Gold gains momentum or breaks key resistance. A major breakout in Gold this year and its effect on Silver is just one reason why Silver could have a big year.

If and when Silver breaks above its 2017 highs, we can declare its bear market over (in terms of time). The chart below plots all of the major bear markets in Silver. They all end at the point when Silver begins to make higher highs and rises in an impulsive fashion. Silver’s bear market was the second worst by price and potentially the worst in terms of time.

The next chart shows the rebounds in Silver from the endpoints in the previous chart. From the three endpoints Silver rebounded significantly in the next 12-15 months. We also included the 2008 crash from which Silver rebounded 100% in the following 13 months.

Turning back to the present, we find $20 on a monthly closing basis to be the most significant resistance for Silver. The chart below is a plot of monthly closing prices. It is quite clear that a monthly close above $20 (the 2016 high) could kickstart a good run for Silver.

Moving from the very long-term to the present, we note that Silver faces initial resistance at trendline 2 as well as the 2017 highs near $18/oz. That stands between Silver at present and the important $20 resistance (which is also shown at trendline 1).

Silver has often rebounded nearly 100% within 12-15 months after bad and long bear markets. History says Silver is ripe for a similar move over the next 12 to 18 months. Since Silver follows Gold, a breakout in Gold could be a huge catalyst for Silver to test and break resistance at $20/oz. If that happens, Silver would be on its way to another, typical substantial rebound. It has happened before and we expect it will happen again. We already own a few juniors with the best silver deposits but we continue to look for junior explorers and silver plays with 5 to 10-fold potential that could benefit from a breakout in precious metals.

To follow our guidance and learn our favorite juniors for 2018, consider learning more about our premium service.

Good Luck!

Email: Jordan@TheDailyGold.com

Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor. Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.