The Case for a Silver Price Rally / Commodities / Gold & Silver 2019

Yes, you read thatright. Despite all the bearish developments that we described in the previousanalyses,and despite myriads of bearish factors that remain in place for the followingmonths, it seems that the white metal is about to rally. Gold, and miningstocks could move higher as well, and we’ll move to that shortly. For now,let’s talk silver.

Inparticular, we’re going to discuss the SLV ETF. This ETF has one big advantageover silver futures chart that we feature regularly. It puts emphasis on pricegaps and shows only that trading which took place when the U.S. market wasopen. This distinction can be helpful in determining support and resistancelevels as price gaps tend to provide such. In fact, the late-September bottom formedonce silver touched the upper border of its price gap.

TheSLV was attempting to break below the lower border of the gap and it has failedto do so three times. This serves as an indication that the white metalis not yet ready to break lower. The price gap on its own would not be strongenough to make the short-term silveroutlook bullish all by itself, but that’s not the only thing that’s pointing to highersilver prices in the near term.

The RSIindicator (upper part of the chart) is close to 30, and that’s when silver’s short-termrallies used to start.

Moreinterestingly, the Stochastic indicator just moved to levels that are lowenough to indicate a short-term buying opportunity on their own. This simpletechnique worked very well in the previous 12 months. Almost exactly 1 year agoit confirmed a medium-term bottom, in early March it indicated a short-termbuying opportunity, and in mid-May it was very close to pinpointing the exactbottom before the mid-year rally. We saw Stochastic close to the buy line alsoat the end of September, which doesn’t really count as a true bullish signal,but silver moved higher nonetheless. So, we have three out of three efficiencywith a little bonus confirmation from about 1.5 months ago. While this doesn’tmake a short-term rally inevitable, it does make it quite likely.

Andnow for the final silver sign – the time. Silver tends to move in a veryspecific way. It moves very fast for a few days, only to act very calm in thenext several days. Some might say that it’s similar to how spiders move interms of seconds. Personally, we find the silver view much more appealing… Whatdoes this have to do with the chance for a short-term upswing in silver? Quitea lot.

Silveralready lost its downward momentum as its been calm for a few days now. Thischaracteristic pattern is what we saw also when silver completed a broad top(just as it did recently) earlier this year. In early March, the fourth day ofthe calm after the storm, was actually a local bottom that was followed by arally to the 50% Fibonacci retracement. Not a ground-breaking rally, butdefinitely something one would prefer to ride on the long side of the marketrather than being short.

Justas one swallow doesn’t make a summer, one analogy to the previous decline isn’tnecessary meaningful. But that was not the only case. Silver declined in a verysimilar manner after the 2016 rally.

Asyou can see, silver losing its downward momentum after a volatile decline washow practically all bottoms of the late-2016 decline formed. We saw the samething in case of the first two important bottoms of 2017.

The silverseasonality also suggests that the short-term decline in the white metal might be over orclose to being over as local bottoms tend to form close to the middle ofNovember.

Whatdoes it all come to? It means that – as far as the next week or two areconcerned – the outlook for silver just became bullish. In fact, we just wroteto our subscribers that we’re taking profits off the table in case ofthe short positions and in today’s Gold & Silver Trading Alert, weclearly outlined the details of making money on the upcoming upswing. Thesedetails cover positions in gold, silver, UGLD, USLV, GDX, NUGT, and JNUG.  And they can all be yours as soon as you signup for our free mailing list – the 7-day full access to our Gold & SilverTrading Alert comes as an added bonus. Yes, it’s all free. Signup now.

Thank you.
PrzemyslawRadomski, CFA
Editor-in-chief,Gold & Silver Fund Manager
Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses andopinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. Assuch, it may prove wrong and be a subject to change without notice. Opinionsand analyses were based on data available to authors of respective essays atthe time of writing. Although the information provided above is based oncareful research and sources that are believed to be accurate, PrzemyslawRadomski, CFA and his associates do not guarantee the accuracy or thoroughnessof the data or information reported. The opinions published above are neitheran offer nor a recommendation to purchase or sell any securities. Mr. Radomskiis not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFAreports you fully agree that he will not be held responsible or liable for anydecisions you make regarding any information provided in these reports.Investing, trading and speculation in any financial markets may involve highrisk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees andaffiliates as well as members of their families may have a short or longposition in any securities, including those mentioned in any of the reports oressays, and may make additional purchases and/or sales of those securitieswithout notice.

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