We continue to cover silver extensively, simply because we think one of silver’s historic rallies is about to start this summer. While silver is poised to move to 50 USD, after silver staged a secular breakout in April, it will likely do so in 2 steps. Moreover, as we think in a 3-wave rally, spread over a few years, we can vividly imagine that silver will hit 100 USD sooner or later. We stick to our ‘conservative’ silver forecast 2023 which is 34 USD.
Consider the following:
- Silver has the most powerful secular (multi-decade) chart setup among all commodities, arguably among all markets.
- Silver is facing a supply deficit in 2023. Price has been flat in 2023. Something has to give.
- Silver started a secular breakout which is 50 days in progress now.
That said, let’s look at the 2 leading indicators.
First, the USD was in a great shape but gave up on Thursday. Not surprise, silver had a strong close of the week, on Friday. While one day does not make a market, it certainly cannot be ignored that the USD is consolidating (not resolving higher) which should be fuel for silver sooner rather than later.
Second, rates have been strong lately. It’s the one leading indicator that has held precious metals ‘flat’ lately, preventing it from breaking out. The Fed guided their Fed Funds Rate to rise to 5.75% by the end of the year, the 2-year Treasury Yields is now 4.7% (expected Fed Funds Rate in one year from now). It is reasonable to expect it won’t move much higher from here, given moderating inflation trends.
With a weakening USD and presumably topping yields we can see the perfect leading indicator setup for silver.
We already mentioned that silver started breakout, around April 1st, when SLV ETF (chart below) cleared 22.00 USD, the breakout point of a multi-year falling trendline. That same breakout was tested two weeks ago, successfully so far.
Moreover, and equally important, we could be looking at a new rising trend channel on the silver chart, green channel on below chart, which is not confirmed yet but could be confirmed soon.
Readers should pay attention to the purple box, top of the chart.
In our Trade Alerts weekend update we used many more charts to explain why silver could rise to that point, please sign up to read The Last Ten Trading Days Of June Are Here (available in the restricted research area). Also, in our Momentum Investing service, we created an overview of our top silver stock selection, which will be updated frequently Silver: Top Stocks For Long Term Portfolios (also available in the restricted research area).