This, the second part of our Silver research article suggesting Silver may be forming a massive price base in preparation for an explosive upside move, will continue from Part I of this research series.
Our research team believes Silver is setting up in a price pattern that may already be “ripe” for an explosive upside move. Our researchers have poured over the data and believe the disparity between Gold and Silver is already at excessive levels.
Historically, anytime the disparity between Gold prices and Silver prices (rationalized into comparative Gold price levels) breaches 30% to 60% and Gold begins an upside price advance, Silver typically begins to move higher with 4 to 8+ months. This setup pushes the Gold to Silver ratio back below 50 or 60 as Silver rallies substantially higher, and faster than the price of Gold.
Comparatively, Silver continues to trade within a sideways price range after basing in early 2016. This price range has been fairly consistent between $14.50 and $21.0. With Gold recently starting to move higher because of the US/Iran military conflict, this raises an early warning flag for our research team because Silver has continued to trade below $18 – and well below recent highs near $20.
The price disparity between Gold and Silver is currently greater than 200% based on our proprietary modeling system. Remember, anytime this disparity level is greater than 30% to 60% and Gold breaks out in a rally, Silver will break to the upside within just a few months.
The second stage rally in Silver, the real money-maker, will come when investors pile into Silver and Silver Miners as the breakout in Silver becomes explosive. The time to get into this trade is/was now or 4 months ago. Still, there is plenty of opportunity for skilled traders right now because the breakout move in Silver and Silver Miners has not really begun yet.
The first big upside move in Silver and Miners will be to attempt to move higher and target recent resistance. Resistance in Silver is currently near $19.70 and $21.00. This means any move above $19.75 (or higher) where the price of Silver fails to move above $22 or $23 would constitute a “Stage 1 Base Advancement”.
After this move is complete, a “Breakout Stage” price move will take place. This may be where Silver prices advance from the $21 to $23 level up towards the $28 to $32 price level. This upside price advance breaches the Stage 1 resistance and attempts to establish new support for a continued Stage 2 advance.
Remember, the current disparity level is just over 200% between Gold and Silver. If Gold continues to rally higher and Silver attempts to break higher, attempting to narrow the disparity level, then Silver will (at some point) enter a near parabolic upside price move above $36 to $40. Our researchers believe this may happen before June or July 2020.
This incredible opportunity is currently setting up for skilled traders. Believe it or not, while Silver continues to trade below $18 per ounce and global investors are focusing on US stocks, Emerging Markets, and Gold, Palladium and others, this setup in Silver may become the biggest investment opportunity of 2020. Sure, Gold may rally 80% to 140% over the next 12 to 24 months. Palladium may rally even higher. If Silver does what we expect it to do once this setup/trigger really breaks open, Silver could rally 500%+ over 12 to 24+ months on an incredible upside disparity reversion move.
This last chart highlights why we believe this setup in Silver should not be ignored. In 2005, the rally in Silver as a result of this Disparity trigger resulted in Silver reaching a 38% higher peak than Gold. In 2009, the same Disparity trigger prompted Silver to rally to levels nearly 300% higher than the peak in Gold prices. If Gold rallies to levels above $2800 to $3100, which is our expectation, and this Disparity trigger prompts an upside move in Silver, we believe Silver could rally to levels 200% to 400% (or more) higher than Gold prices. By our estimates, that would put Silver prices above $90 to $95 per ounce – possibly much higher.
Take advantage of any opportunity you have to position your portfolio for this setup and be patient. The upside breakout in Silver happens like a train leaving the station. Slow and steady at first, then building momentum, then finally running at top speed. Each time this Disparity trigger sets up and executes, Silver starts a moderate move higher at first, then explodes to the upside as Gold continues to rally higher. That last explosive move is why Silver reaches peaks that are substantially higher (in percentage terms) than the peaks in Gold.
You don’t have to be smart to make money in the stock market, you just need to think differently. That means: we do not equate an “up” market with a “good” market and vi versa – all markets present opportunities to make money!
We believe you can always take what the market gives you, and make a CONSISTENT money.
Learn more by visiting The Technical Traders!
Chris Vermeulen
Technical Traders Ltd.
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation for their opinion.
This article is just a lot of wishful thinking. I see a big head and shoulders pattern on the silver chart...
That is a six year base you are looking at (right shoulder). If it were a H/S pattern then you are say measuring from the shoulders to the head will therefore create a situation where silver goes negative in value! Go ahead and short it with puts!
He is saying that if gold goes to $3500 and we have a gold to silver ratio of 30 then silver is 100 an oz.
Hi Chris
Thanks for your article. May I ask what you invest in? SLV is up 5.92% since 17 Dec 2019, but USLV (3X) is up
17.28% since 17 Dec 2019.
Do you perhaps use options or LEAPS?
Kind regards
Mal
but if you don't want to take on leveraged risk - then go the other way and sell pixels and buy silver
silver is a small market, and if ten million IRA's bought a hundred ounces of silver, they would own an entire years production of an irreplaceable commodity in most of its uses
and the price would go up to prevent it