Silver Chartbook: The Silver Permabull

As experienced traders, you rarely want to take an extreme position. Being biased isn’t useful for objective chart analysis. Many dare to do that anyhow since no one remembers you making a bad call 15 years ago, but if you were right, you can quote: “I told you so”. The other side of the coin is that trend needs to be identified early and then played just right since there is no grander edge than directional momentum.

We aren’t after fame and glory. Midas Touch provides data as accurately as possible supporting good wealth preservation and wealth creation. We provided many principles and data about silver over the last two years to shed light on a possible bull run in silver. It was spot on to advise entries in March when silver was trading still at US$12.00. We also provided readers with quite a few more low-risk entries. These are to build a long-term position with remainder runners (see our quad exit strategy) for the long-term hold.

Silver, Weekly Chart, The Second Leg

Silver in US dollar, weekly chart as of December 10th, 2020

Now that we have the first successful leg with substantial profit-taking completed, we find a high likelihood for continuation into a possible second leg. After a sideways zone from September this year, we see a progression from the lows of this sideways channel through its range. After that, a possible initiation through a breakout of its upper bounds into a second leg.

Our projections are extremely conservative since, typically, second legs are the longest legs, and as such, a doubling in price from here is more than likely.

Silver, Daily Chart, May Be Like This

Silver in US dollar, daily chart as of December 11th, 2020

It isn’t quite clear how the painted scenario of much higher silver prices (XAGUSD:CUR) as well as much higher quotations for the iShares Silver Trust ETF (SLV) and the Sprott Physical Silver Trust (PSLV) will unfold from a small time frame perspective. We drew the most likely scenario above on the daily silver chart. This, that, or the other entries will be posted in our free Telegram channel in real time. The emphasis here is on the general probability. It points from a seasonality perspective to typically higher prices in December and January for this commodity. Typical year-end hiccups, especially this year, cannot distract the professional from the larger picture.

Silver, Monthly Chart, Where Are We Heading?

Silver in US dollar, monthly chart as of December 11th, 2020

Where thinking in extremes starts making sense is in not limiting projections, if reasonable substantiated factors speak for extended moves. These can have, beyond the typical three-legged extensions, a fourth and a fifth leg as well. Here, it is important to add to technical tools fundamental analysis.

Why extremes in this one rare instance are useful is that exits are way more meaningful than entries. Realistic target assessment is the key factor of profitability.

One fundamental fact about silver easily overlooked is its rarity in comparison versus other precious metals in terms of “loss”. What we mean by “loss” is that, in terms of weight, there is about twice as much mined silver in bullion in the world than gold. But the rate of “loss” due to industrial use is much grander than golds. From over 50 billion troy ounces ever mined, less than 5 billion remain. It is important to keep that in mind when comparing the estimate of about forty times silver in weight being still unmined in comparison to gold.

In short, due to the high industrial demand for silver and its high “loss” rate (it is hard to recycle), it qualifies from a long-term view as a permabull's friend. It is this “loss” rate that can make it more and more precious over time.

Silver The Permabull

You can call it what you like. What it comes down to is taking low-risk trades. If you can do so in the direction of a trend, even better. After silver broke a multiyear sideways range to the upside, a new long-term phase for silver has been confirmed. With a trend on your side in alignment with fundamentals that are substantially supporting especially physical silver long-term holds, you can not only preserve your wealth but also expand your wealth too. An opportunity that arises rarely and might be suitable for a permabull.

Disclosure: I am/we are long XAG-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.