By: James Turk on November 14th
Silver’s short-term uptrend remains intact, notwithstanding silver’s big price drop on Friday. The fundamental factors driving silver higher have not changed. The outlook for silver remains very bullish.
There has been no damage to silver’s technical condition. For example, silver is above its 21-day moving average. Also, silver remains well above $25, its last major resistance level. More importantly, the price drop at the end of the week occurred with bullish sentiment taking a nosedive. These conditions bode well for silver’s short-term outlook, as does the following chart.
The above chart will be familiar because it is the one I used on King World News on October 28 to forecast a $30 silver price in less than 18 trading days. Silver closed that day at $23.871. On November 9, only 8 trading days later, it reached $29.342 – nearly hitting my target. The good news is that my reading of the above chart indicates that silver might yet reach $30 within my 18-day target, i.e., November 23.
Note the new pattern silver has formed. It is a pennant, and these have the same features as the pattern upon which I based my $30 forecast. Both are continuation patterns within up trends. A pennant pattern typically ends with an upside breakout.
My expectation therefore, is that silver will break out of this pennant to the upside, and probably early this week. The demand for physical silver remains very strong, and it is the demand for physical silver, and not paper-silver, that ultimately determines the silver price.
Most trading in physical silver takes place in London and Zurich. The weakness on Friday occurred after both of these centers had closed. That means that prices were driven down in the paper market. We have seen these late Friday raids to ‘paint the tape’ many times over the past decade, so this latest one should not be a surprise. But what is indeed a surprise to me is that the silver shorts would try this gambit now when the physical market is so tight. Lower prices will only heighten the demand for physical metal. Thus, I expect the silver price to rebound sharply this week.
All Things Considered – John’s Commentary:
Everyone in the industry deeply respects James Turk. I believe his analysis to be balanced and accurate. I would NOT bet against silver and the silver price.
Action to take: Silver may retreat modestly in the very short term (and it may not), but unless you enjoy playing Russian roulette trying to time the rises and corrections, get your silver position and hold on tight!
The one caveat will be when the Gold:Silver ratio reaches 48:1. I will then be encouraging those clients who are so inclined to swap a portion of their silver for gold to gain additional ounces at no additional cost. Please contact me if you would like to learn more.
What to buy: In this order: Pre-1965 silver coin, 100 oz. silver bars, 1 oz. generic silver rounds and lastly 1 oz. silver Maple Leafs and/or silver Eagles. Stay away from any sort of oddball, esoteric silver. Stick with the bread and butter bullion.
Quote of the day: “Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens.” – Ludwig von Mises
