While the silver price is trading at another important short-term technical level, the underlying fundamentals continue to improve. Since silver peaked at $19.75 at the beginning of September, it has been correcting lower to key support levels. As I mentioned in my last update, the silver price would like correct back down to a key support level before moving higher. And, if history is a guide, there is a likely price where that turnaround will occur.

However, it is essential to understand that technical analysis is only one aspect that guides the silver market price. Another more important factor is the improving fundamentals for precious metals as the Fed, and central banks begin to ramp up QE (money printing) once again. Of course, Fed Chairman Powell says the $60 billion a month in Treasury purchases is NOT QE.

I got a good laugh from Sven Henrich (northmantrader.com) response in his article Control:

Don’t call it QE they say, but ignore the fact that they are running a program equal in size to the annual US military budget. At $60B that’s exactly what it is. Massive

Fed Chair Jay Powell: The economy is in a good place. Now here’s a $60B per month Treasury bill buying program, multiple rate cuts and daily repo operations. How stupid do they think we are?

If the U.S. economy is in such a GOOD PLACE, then why does the Federal Reserve need to buy $60 billion a month in U.S. Treasuries? And, as the Northman trader stated, the Fed Treasury purchases are equal in size to the U.S. military spending. According to U.S. Government 2020 fiscal budget, the Department of Defense will spend $718 billion this year. Thus, $60 billion multiplied by 12 months is $720 billion.

That puts it all into perspective. The amount of U.S. Treasuries, the Federal Reserve, is buying a month, is approximately the same amount the military is spending. This is nothing more than SMOKE & MIRRORS to keep the sheep asleep.

Even with the Fed lowering interest rates, continuing repo operations until January 2020, and the $60 billion a month in U.S. Treasury purchases, the Dow Jones Index is still trading near the same level it was at the end of 2017. Sure, we could see the Dow spike higher if the U.S.-China trade agreement is successful, but the underlying fundamentals of the U.S. and global economies continue to weaken.

Which means, the reason to own precious metals will only improve as the Fed and central banks lose control of the QE and zero interest rate policy. This is not an IF, but WHEN.

With that being said, let’s look at where the silver price may head over the short term. Currently, the silver price is trading within another triangle formation. As of the close yesterday, silver closed up against upper triangle formation:

There is no coincidence that silver stopped right at the upper part of the triangle formation for the past four days. When stocks and commodities trade in this pattern, if it breaks above that diagonal line, it would be bullish short term. However, the gold and silver prices have opened lower in U.S. markets this morning. So, it doesn’t look like it will break above that upper triangle trend line, but we don’t know what tomorrow will bring.