Silver: Vulnerable Short Term, but Long Term Outlook Is Excellent
Technical Analyst Clive Maund explains why he believes that silver has a strong outlook in the long term even with current vulnerabilities.
As usual, many of the observations regarding gold set out in the parallel gold market update apply equally to silver, so they will not be repeated here.
On silver's 6-month chart, probably the most important point to note is that following gold's failed attempt to break above the key US$2100 level early in December, silver has dropped away, whereas gold has broadly moved sideways, marking out a potential top area.
This shows relative weakness on the part of silver, and on the chart, we can see that it is already dropping away again beneath the trendline, with its moving averages rolling over into a bearish alignment. So if gold breaks down from its Head-and-Shoulders top pattern as expected, then silver is likely to drop at least to the next significant support level in roughly the US$20 - US$21 area.
The longer-term 2-year chart gives us more perspective, and on it, we see that silver has essentially been stuck in a trading range for over a year since late 2022.
If gold breaks down from the Head-and-Shoulders top that we looked at in the gold market update and drops away, then we can expect silver to drop at the same time, at least to the support level in the US$21 area.
The long-term outlook for gold and especially silver remains most favorable.
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Clivemaund.com Disclosures
The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.