After Silver’s Recent Rally, Where Is It Headed Next?

| June 27, 2019 | 0 Comments

Silver bulls have been breathing easier after last week’s performance.  This is probably the best “silver pop” we’ve seen in several years.  The sad thing is it came rather unexpectedly so longer-term traders may not have caught the beginning of the run.  The chart of SLV shows just how quickly the pop hit.

silver

I’ve drawn the downward resistance level line so you can clearly see why the silver naysayers were so loud starting about the end of February. Before that, silver had been chopping along just fine, noisy for folks who don’t usually trade metals but nothing to be concerned about for more experienced silver watchers.

Then came the failure to get up through resistance in the middle of March. That really marked the beginning of a period of pain for silver. For prices to go up, more new people (traders and investors) need to be putting money into the market.  That didn’t happen because folks are still in ride-the-bull mode; we are, after all, either still on the longest-running bull market in history, or we have only just recently got shaken off, depending on how we choose to define “the end of the bull market”.

Whichever way you want to argue that point, for silver the reality is that more money is still not flowing into the sector.  We have seen some hints of new money coming in, but it is more like testing the waters than a final decision.  Believe me, when “everyone” decides it’s time to buy silver – or more broadly to buy safe-haven assets like gold, silver, and utility bonds – we’ll see a very sharp rise in the chart.

What we have seen recently is enough to know silver isn’t off the radar.  Look at how silver popped after the “first possible buy-the-break day” noted on the chart.  Then there was a hint that the US-China trade war might be wrapping up, and bam — the quick run was over.  But then “Oh No The Trade War Is Still A Thing!” And silver starts running up again.

So silver isn’t off the radar, even if we take a breather here. Might be a good time to take some short-term profits if you bought any lower than this, but I sure wouldn’t sell any long-term silver holds yet.  The best is yet to come. The only question is when.

Signed,

The Gold Enthusiast

DISCLAIMER: The author is long the silver sector via small positions in PAAS, SVBL, and AGQ. He intends to sell the AGQ today due to reasons discussed in this article but has no intentions of trading the rest in the next 72 hours.

Note: This article originally appeared at The Gold Enthusiast on June 25, 2019.

 

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Category: Silver

About the Author ()

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals. Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach. Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"
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