Why You Must Own Silver in 2018 / Commodities / Gold and Silver 2018

While Gold is very close to a major breakout(in price) its strength has not filtered down to Silver yet. Gold is 3% awayfrom a major breakout and comfortably above its long-term moving averages.However, Silver is well below its 2016 high and is currently battling its200-day moving average. But that is okay. Silver typically lags andunderperforms Gold until Gold gains momentum or breaks key resistance. A majorbreakout in Gold this year and its effect on Silver is just one reason whySilver could have a big year.

If and when Silver breaks above its 2017highs, we can declare its bear market over (in terms of time). The chart belowplots all of the major bear markets in Silver. They all end at the point whenSilver begins to make higher highs and rises in an impulsive fashion. Silver’sbear market was the second worst by price and potentially the worst in terms oftime.

The next chart shows the rebounds in Silverfrom the endpoints in the previous chart. From the three endpoints Silverrebounded significantly in the next 12-15 months. We also included the 2008crash from which Silver rebounded 100% in the following 13 months.

Turning back to the present, we find $20 on amonthly closing basis to be the most significant resistance for Silver. Thechart below is a plot of monthly closing prices. It is quite clear that amonthly close above $20 (the 2016 high) could kickstart a good run for Silver.

Moving from the very long-term to the present,we note that Silver faces initial resistance at trendline 2 as well as the 2017highs near $18/oz. That stands between Silver at present and the important $20resistance (which is also shown at trendline 1).

Silver has often rebounded nearly 100% within 12-15months after bad and long bear markets. History says Silver is ripe for asimilar move over the next 12 to 18 months. Since Silver follows Gold, abreakout in Gold could be a huge catalyst for Silver to test and breakresistance at $20/oz. If that happens, Silver would be on its way to another,typical substantial rebound. It has happened before and we expect it willhappen again. We already own a few juniors with the best silver deposits but wecontinue to look for junior explorers and silver plays with 5 to 10-foldpotential that could benefit from a breakout in precious metals.

To follow our guidance and learn our favorite juniors for 2018, consider learning more about our premium service.

Good Luck!

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