Silver – Time To Buy

The correction in the precious metals sector continues and seeks to undermine investor confidence more through time than by time. While the price of gold at US$1.870 is down around 10% and the price of silver at US$24.15 is down around 20% from the August highs, the three-and-a-half-months sideways slide is causing increasing irritation and pessimism. However, the course of the current correction is very similar to all other pullbacks in the last two years. While the bears are not making any progress on the downside, sharp and sudden pullbacks like on Monday 9th of November occur again and again on the upper side. This is causing disappointment and obviously raising question marks. Overall however, the tough and confusing sideways consolidation has simply continued in the sector, shaking off many weak hands over time. With this stretch torture and sentiment numbers have eased completely. Although one cannot (yet) speak of panic and a mood of “giving up”, the interest and confidence in the precious metals sector has again fallen significantly and coverage in the mainstream media has diminished. Silver – Time To Buy!

ECB Balance Sheet as of November 13th, 2020. Silver - Time To Buy

ECB Balance Sheet as of November 13th, 2020.

Fundamentally and in the big picture, nothing has changed at all. The ongoing correction in precious metals was expected and is perfectly healthy. There is no cause for concern. On the contrary, while financial markets are yearning for the next big stimulus package, all central banks around the world are expanding their balance sheet to unprecedented levels. In the ivory tower of the European Central Bank (ECB) in Frankfurt, Madame Lagarde & her accomplices continue to create almost 35 billion euros every week out of nowhere. Hence, the ECB’s balance sheet reached a new all-time high of 6.833,5 billion euros. These euros are in the system and are destroying your purchasing power. Only with gold, silver, bitcoin, and selected mining and commodity stocks you protect yourself and your family against this madness.

Daily chart silver in US-Dollar – The probability for new lows is shrinking

Silver in US Dollar, daily chart as of November 21st, 2020. Silver - Time To Buy

Silver in US Dollar, daily chart as of November 21st, 2020.

The price of silver has been moving higher within a large upward trend channel since the Corona crash in March, rising from US$ 11.64 to US$29.86. Since August 7th however, silver has been correcting this massive rally. The low of the still-ongoing correction was reached in mid-September at US$21.66 so far. Since then, there has been a confusing back-and-forth, without the bears being able to push silver prices below US$22 anymore. After a sharp and nasty slide down from US$26 to US$23.55 about two weeks ago, the bears are currently trying to break the upward trend channel to the downside. If they succeed in this venture, silver might actually continue to slide down to US$23 and possibly also below US$22!

However, the price of gold seems to be able to defend its important support zone around US$1.850. The weekly and the daily charts are oversold and provide the first contrarian entry signals. If the price of gold can hold above US$1.850 and US$1.860, the price of silver will certainly not be able to fall significantly. Alternatively, there will be a final sell-off in the gold market towards US$1.800. Only then will the price of silver also come under the wheels and reach its rising 200-day moving average (US$20.37) in the next few weeks.

Another supply shock in the making?

Especially in view of the new lockdowns and a possibly further limited supply situation, the tough and confusing sideways consolidation could simply continue for a few more weeks. But as there might be again significantly increasing premiums on coins and bars due to a limited supply situation, it is better not to hope for the final sell-off anymore. Instead, now is the time to act!

Overall, the correction has already progressed very far, especially in the case of gold. From mid-December at the latest, a reversal of the trend and the beginning of a new wave up can be expected. Since silver does not have a life on its own at the moment, it will more or less follow the price of gold. Due to the threat of supply shortages, the time has now come to abandon the patient and wait-and-see attitude that we sticked to over last few months. The remaining risk of gold may still be between US$50 and US$75 on the downside. In the case of silver, it could still drop US$1 to US$3 lower. Nevertheless, both physical precious metals as well as the mining stocks should now being bought with both hands.

Silver in Euro: Purchase limit is raised to 20.50 Euro

With a low around 19.30 euros our buy limit has been triggered several times around the end of October. Even if the technical situation in silver does not currently send any new buy signals and theoretically further pullbacks are possible, an increase in the limit to 20.50 euro now makes sense. In the current situation, it is simply more important to possess sufficient physical precious metals instead of waiting for the very best price. It is recommended to hold at least 10% better 15% to 25% of your total networth in gold and silver. Silver – Time To Buy!

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.