The current silver price trend is once again at a critical juncture.
It has been four years since the price of silver crossed an important trend
line. However, the present setup will result in either another
correction lower, or a much higher price.
This is a ten-year chart which shows the current trading setup for silver:
The blue line represents the 50 month moving average,and
the red line, the 200 month moving average. Since the
price of silver fell below the blue line at the beginning of 2013, its
support has been the red line. It did not fall below the red line at
its low in the beginning of 2016 and has bounced twice off the blue line,
which is now acting as resistance by traders.
Currently, the silver price is hitting up against the 200 month moving
average blue resistance line. If the silver price breaks above
and closes above it, we could see a much higher silver price.
However, if does not, then we could experience another short-term correction.
Looking at the current silver COT REPORT, there is a record commercial
short position against silver. The Commercial short positions are from
the large bullion banks:
The red lines at the bottom of the chart represent the total Commercial
net short positions in silver. As we can see, it is at a record
high. This high Commercial net short silver position normally means the
silver price will likely head lower…. over the short term.
That being said, I have become less concerned about the SHORT-TERM silver
price movement. While some investors are able to trade and make money
trading silver, I am not one of them. My focus on silver is to
hold onto it for the LONGER-TERM. Short term silver price movements are
not a concern when we focus on the disintegrating energy and economic
fundamentals.
Some precious metals investors have become frustrated or complacent due to
the low silver price. This is understandable because some may have
purchased silver at a higher price and feel as if they made the wrong
investment decision. However, acquiring physical silver should be done
over a period of time and be held as a SAFE HAVEN for the future…. just like
any other retirement plan.
The BIG difference between owning physical silver and most paper
retirement plans, is that the value of most retirement assets will likely
plunge in value in the future while the price of silver will likely be much
higher. Unfortunately, most investors are either too impatient,
fickle or lack the ability to understand this LONG-TERM fundamental setup.
Lastly, if Americans who are mainly invested in STOCKS, BONDS and REAL
ESTATE, diversified into a small 2-5% allocation of physical gold and silver,
it would totally overwhelm the market…. forget about the rest of the 7
billion people in the world.
Which is precisely why the MANIPULATION of gold and silver has
been done mainly through psychology, rather than price.
Why? Because the current algorithm pricing mechanism for gold and
silver is based on their cost of production. So, to see a current $18
silver price and $1,275 is not that ridiculous if it is based upon what it
cost to produce them.
But, gold and silver behave much differently than most commodities,
energy, good and services. While most commodities and energy are
consumed, a lot of gold and silver are saved. So, gold and silver must
be valued differently. If individuals realized the dire energy
predicament we are facing in the future, they would realize it would be
prudent to own some physical gold and silver. However, they are being
mislead by the Mainstream media, so they cannot really be blamed.
When the markets finally crack…. the Fed and Central Banks may have one
last RABBIT to pull out of the hat, and that would be a HYPERINFLATIONARY
event. Unfortunately, this will not last long and will end quite badly.
Thus, when we reach this point… there is NO GOING BACK. The United
States and world will look like a much different place and at that point, it
will be too late to sell paper and buy gold and silver.
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