Silver – Very Promising Outlook

After a significant correction in the price of gold and silver between August 7th and November 30th, the bottom is now very likely in. From its low at US$1,764 gold was abele to rally more than US$130 already. Silver gained more than US$4 since its low at US$21,83. Given this bullish price action over the last two and a half weeks, the chances for a turnaround and a new wave up in the precious metals sector are very high. Silver – Very Promising Outlook

Overall, gold and silver as well as the mining stocks are likely to be off to an excellent start into a promising first quarter of 2021. The outlook for the full year is also extremely good. Latest by mid to late summer, the price of gold is expected to break out to new all-time highs. Silver should at least see its all-time high at US$50 over the course of 2021. However, with the dramatic expansion of the global money supply and the accelerating crack-up boom, an exponential rally could also bring even more bullish price action and fireworks until spring already. In any case, gold, silver, mining and commodity stocks as well as bitcoin are your best bets for for the new year and an excellent mix for wealth preservation.

Silver in US-Dollar – Breakout above the downtrend line

Silver in US Dollar, daily chart as of December 17th, 2020. Silver - Very Promising Outlook

Silver in US Dollar, daily chart as of December 17th, 2020.

While gold fell back to a new low at US$1,764 during its four-month correction on November 30th, silver was able to turn around above its September low (US$21.66) at US$ 21.83 already. This alone shows the relative silver strength!

This can be justified by the extremely large catch-up potential that the silver has in the big picture. Back in 2011, with  a similar gold price around US$1.880 silver traded above US$40! In addition, the gold/silver-ratio with current values at 1:73 is still way too high in the long-term comparison. A ratio of 1:55 to 1:60 is more realistic in the medium term.

Of course, in the further course of this precious metal bull market there will also be an overshoot and a huge exaggeration in silver. Again, the period 2010-2011 serves as a good blueprint, when silver almost tripled from US$17 to US$50 within just 10 months. From this perspective alone, the medium- to longer-term outlook for silver is really fantastic!

Silver – Very Promising Outlook

Technically, silver just broke above the downtrend line of the last four months. The rapid price increase (at the peak US$26,12 so far) towards the next resistance zone around US$26 was the logical consequence. Thus, the bulls are currently bending the upper Bollinger Band (US$25.80) to the upside on the daily chart. Statistically, this persists for a maximum of four to six trading days at a time. After that, a market must consolidate at least sideways and first digest this effort in order to recharge new powers for the next move higher. Hence, don’t expect silver to directly continue its rally towards US$30.

In combination with the clearly overbought stochastic oscillator on the daily chart, above US$26.50 the air will therefore become a little thin for the silver bulls. Nevertheless, there is no need for a significant pullback. Rather, most of the corrections in a bull market are achieved via a sideways consolidation and over the timeline. Alternatively, the former downtrend line will be tested from above, which defines a “worst case scenario” of around US$24 on the downside. In the view of the next two to three months, however, silver is very likely to target its summer high (US$29.86) around US$30. 

Next leg up until spring 2021

Overall, the correction in the precious metals sector appears to be over. Both gold and silver have already recovered significantly from the lows at the end of November. Likewise, most mining stocks now have clear reversal pattern on their charts. In some cases, “fundamentally strong” companies have already broken out to new highs. This means that gold and silver seem to be sticking to their seasonal pattern again this year, with a new wave up starting in early/mid December after an important low. This leg up should continue into next spring. Above all, the precious metal bull market is intact and will bring new highs next year. The four-month pullback provided another good entry opportunity over the last few weeks.

Silver in Euro: Purchase limit up to 20,50 Euro

Silver in Euro, daily chart as of December 17th, 2020. Silver - Very Promising Outlook

Silver in Euro, daily chart as of December 17th, 2020.

Four weeks ago, we slightly raised the silver purchase limit to 20,50 Euro to ensure that the sell-off period could really be used. The low on November 30th came in at 18,30 Euro. Overall, there was plenty of time to buy physical silver in the last four weeks at spot prices below 20,50 Euro and on five trading days also below 19,50 Euro. Given the disastrous outlook for all paper currencies and paper assets, the allocation to physical silver below 20,50 Euro continues to make a lot of sense.

Those who do not yet own any gold and silver at all should immediately exchange at least five percent (5%) of their total assets (net worth) into precious metals. It is not the best price that matters, but only the fact that you hold it in your own hands.