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Title: Silver Springboards Higher – What’s Next?
Source: [None]
URL Source: https://www.moneymetals.com/news/20 ... how-high-will-silver-go-002037
Published: May 21, 2020
Author: Stefan Gleason
Post Date: 2020-05-21 16:46:26 by BTP Holdings
Keywords: None
Views: 109
Comments: 12

Silver Springboards Higher – What’s Next?

by: Stefan Gleason

Money Metals News Service

May 21, 2020

The silver market is on the move. In fact, it’s finally moving out ahead of other precious metals and showing some real leadership.

After the panic selling of March briefly brought spot silver below $12/oz, prices have since surged by 50%. That’s an impressive move to take place within the span of just two months.

The question for investors now is whether the recent rally in silver is fleeting or sustainable – whether it’s evidence of extreme market volatility that suggests more danger ahead or the first leg of a much larger bull market to come.

In our view, there is good reason to believe that the March 2020 lows will never be violated and that silver is therefore in a structural bull market.

Last Monday, Money Metals posted “Silver Breakout in Progress” as a market update. We noted, “Silver prices will run into some overhead resistance just above the $16/oz level. Once broken, that technical line on the weekly chart could serve as a springboard for a run toward $19/oz – and ultimately higher.”

The technical clues we presented for an imminent breakout were confirmed that Friday. Silver springboarded to $17/oz. Then yesterday, carryover momentum brought prices up near $18/oz before this morning’s pullback.

Silver Price Chart (May 20, 2020)

The bullish mega-trend for silver – fueled by accelerating monetary debasement, declining worldwide mine production, and strong safe- haven demand – is likely just beginning.

At the same time, there are growing signs of shortages in physical silver, at least in some parts of the world. This week, bullion banks have been scrambling big time to find the 1,000-ounce silver bars they need to make near-term delivery commitments on the Comex. This shortage in the U.S. of deliverable silver has caused New York spot silver prices to diverge more than 50 cents above London spot. Such a spread is extremely rare, and arbitrageurs do not seem able to transport enough silver from London to New York to close the gap anytime soon.

None of this means there can’t be sharp pullbacks to come. Silver is a notoriously volatile commodity that seems to specialize in shaking people out (especially leveraged speculators in the futures market).

Although nothing is guaranteed in these wild and often manipulated markets, the blue line shown in the chart above, which had been resistance, will likely now serve as final support in the event of a selloff.

Fundamentally, a silver price below $16/oz is simply not sustainable given that all-in mining costs for the metal currently range into the high teens.

While another bout of irrational panic selling over virus fears is possible should it make a deadly resurgence, the remaining upside potential for silver in the months and years ahead far exceeds its downside risk.

Silver is historically cheap versus just about any other commodity or asset class on the planet.

When measured against gold, silver has never been cheaper – going back through hundreds of years of record-keeping – than it was during the depths of the March selling.

Silver’s unprecedented cheapness versus gold (at one point 1/126th the gold price) gives us further confidence that those extreme lows were anomalous displays of “peak fear” that will never be seen again.

At present the gold:silver ratio comes in right around 100:1. Although still extremely elevated (by normal standards) in favor of gold, silver has been rapidly gaining ground against its pricier counterpart and can be expected to continue closing the gap as the bull market in both metals advances.

With an election coming up and uncertainties surrounding the economy and COVID-19, investor interest in precious metals is likely to remain robust.

A ballooning federal debt and Federal Reserve balance sheet pose serious risks for holders of U.S. dollars.

Fed chairman Jerome Powell recently assured Congress the central bank is “committed to using our full range of tools to support the economy.” They are all “tools” of currency debasement, regardless of what jargon or acronyms monetary planners trot out to describe them.

Granted, safe-haven bullion and ETF buying could taper off in the event that the economic outlook brightens and investor fears recede.

But since more than 50% of silver demand comes from industrial applications, a recovering economy isn’t necessarily a negative for prices – especially when so many other fundamental and technical indicators are now turning bullish.


Poster Comment:

Graph at source.

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#1. To: BTP Holdings (#0)

Ever wonder...if owning silver and gold is such a wonderful idea, why do the producers and traders sell????

Cynicom  posted on  2020-05-21   16:53:48 ET  Reply   Trace   Private Reply  


#2. To: Cynicom (#1)

if owning silver and gold is such a wonderful idea, why do the producers and traders sell?

It's a business.

They sell what they cannot afford to hold. The fact that they sell some doesn't imply that they're not holding any.

Owning ammunition is a wonderful idea, too. The guy who owns the gun shop sells the ammo that he can't afford to hold.

Owning a vehicle is a wonderful idea for a lot of people, even the folks at Ford -- who will gladly sell you a truck.

StraitGate  posted on  2020-05-21   17:05:13 ET  Reply   Trace   Private Reply  


#3. To: Cynicom (#1)

why do the producers and traders sell????

Producers sell because that is their business, mining and refining and putting the metals on the market.

Traders sell to consumers (jewelers and others) and those who wish to put precious metals in their portfolios.

Paper investments (ETFs) really have no value since you are not holding the metal in your hand and it can all disappear in an instant. ;)

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2020-05-21   17:22:27 ET  Reply   Trace   Private Reply  


#4. To: BTP Holdings (#3)

Granted...

The hue and cry is always...BUY AND HOLD...

Emphasis on HOLD...Why do the sellers advise HOLD????

Cynicom  posted on  2020-05-21   18:01:13 ET  Reply   Trace   Private Reply  


#5. To: Cynicom (#4) (Edited)

Why do the sellers advise HOLD????

Because they know that prices will go up. No need to liquidate especially since certain banks are accumulating silver as quickly as possible.

Silver can also be consumed, whereas gold cannot. It is used in certain applications but those are limited.

China is also accumulating gold as quickly as they can and planning on releasing a 20% gold backed Yuan.

When that happens it will be the death knell for the dollar since it is only backed by promises to pay. ;)

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2020-05-21   18:10:27 ET  Reply   Trace   Private Reply  


#6. To: BTP Holdings (#5)

Because they know that prices will go up.

And if prices fall, who is left holding the bag?

The producers? NO they sold asap upon production.

Traders??? No they sold as soon as could locate a buyer, WILLING TO HOLD.

I suspicion both want to unload ASAP on some "wise buyer"???

There are commercial users of silver etc, but it is the "wise HOLDER" that props up the market.

Cynicom  posted on  2020-05-21   18:25:47 ET  Reply   Trace   Private Reply  


#7. To: Cynicom (#6)

it is the "wise HOLDER" that props up the market.

If memory serves, that holder would be J.P. Morgan bank. ;)

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2020-05-21   18:32:40 ET  Reply   Trace   Private Reply  


#8. To: BTP Holdings (#7)

If memory serves, that holder would be J.P. Morgan bank. ;)

The MAJORITY holder is always the little guy at the end of the string.

That is why the constant drumbeat to "buy and HOLD silver, gold etc. That is why always the hype for the minnows to get in on the action, "buy our gold and silver, hold onto it forever.

When metal takes a dive, the producer still owns the mine and equipment,the seller loses nothing, he sold it to me, I the minnow am about to take a bath.

Cynicom  posted on  2020-05-21   18:47:49 ET  Reply   Trace   Private Reply  


#9. To: Cynicom (#8)

about to take a bath.

It was the Hunt brothers that lost their shirts when trying to corner the silver market. But they were doing it with borrowed funds. :-/

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2020-05-21   19:50:59 ET  Reply   Trace   Private Reply  


#10. To: Cynicom, BTP Holdings (#1)

Miners sell because they have to pay wages to run the mine. It is the long term prospects that should concern us. Basically, Bankers can't print gold and silver.

The Truth of 911 Shall Set You Free From The Lie

Horse  posted on  2020-05-21   21:46:36 ET  Reply   Trace   Private Reply  


#11. To: Horse (#10) (Edited)

It is the long term prospects that should concern us. Basically, Bankers can't print gold and silver.

In ancient Rome they were clipping coins to make the precious metals go further.

Maybe when we get to Star Trek, we will meet Ferengi and our money will be gold pressed Latinum. LOL

"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke

BTP Holdings  posted on  2020-05-21   21:49:38 ET  Reply   Trace   Private Reply  


#12. To: Horse (#10)

Miners sell because they have to pay wages to run the mine. It is the long term prospects that should concern us. Basically, Bankers can't print gold and silver.

Mine owners sell. No matter the market up or down, they OWN THE MINE AND EQUIPMENT, sellers nust sell at increased price or they lose. That is where the Ponzi effect comes in. The end buyers MUST BE ENCOURAGED TO BUY AND """HOLD""".

Small holders, minnows, all line up tomorrow to SELL, the price of gold or silver tanks.

Or, God forbid, the government decides to take in all silver and gold at their price, all the minnows will do as told.

Wont happen? FDR tried it in my lifetime. remember the "holders" are the first to lose.

Cynicom  posted on  2020-05-21   22:20:04 ET  Reply   Trace   Private Reply  


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