So, technicals are still relevant after all.
I’ve been writing about $120 target for silver for many months
now.
Most recently, on Monday.
However, the
first time I featured the above chart with $120 as the long-term
target was literally years ago.
This level was reached today.
Silver futures topped
at $121.75 and then they plunged below $107, finally stabilizing
close to $110. But the size of the intraday reversal serves as a
reminder that the white metal can decline even faster than it
climbs.
Remember: back in 2011, it took just six trading days for silver to
erase two months of gains.
If this was to be repeated, we’d have silver just above $50
before Valentine’s Day.
Possible? Yes, but of course, the decline doesn’t have to be
as volatile.
Potential Silver Top
Also… It’s still possible that silver moves higher in
the near term. It didn’t decline tens of dollars – it
was simply very volatile earlier today. However, based on the target
that was reached and given the situation in the USD Index AND the
general stock market, it could really be the case that
silver just topped.
The stock market might be particularly important here. The USD Index
moved back up in the very recent past, but it didn’t trigger
declines in PMs. Today’s decline in the stock market, however,
triggered bigger moves lower.
This is a very important clue.
Stocks have once again failed to stay above their 2025 high,
indicating that the rally could be over. This is yet another
invalidation of this kind, but the size of today’s intraday
decline in PMs suggests that this might be something different.
The short-term weakness present in mining stocks is also telling.
I used the red rectangle to show you how the current prices of GLD,
SLV, and GDXJ compared to last week’s prices.
In short, gold and silver are up, but miners are down. This is
exactly how rallies tend to end.
Bitcoin Breakdown Accelerates
Also, speaking of important signs, the decline in bitcoin is picking
up pace.
After verifying its breakdown below its flag pattern, bitcoin
declined about 5% today.
I previously emphasized that if one doesn’t have a short
position in bitcoin yet, it would be a great time to enter it or add
to the existing positions, if one is not happy with their size yet.
In my opinion, this continues to be an excellent idea from the
risk-to-reward point of view.
The “new gold” was on the verge, and now it’s
in the middle of the first step forward.
Last but definitely not the least – gold. The yellow metal
first soared, and then it plunged by almost $500 on an intraday
basis. And to think that when I first got interested in the previous
metals market many years ago, gold’s nominal price was much
less than that…
Time flies, and so does the price of gold. It looks like the gravity
will reassert itself soon enough, though.
Thank you for reading today’s analysis – I appreciate
that you took the time to dig deeper and that you read the entire
piece. If you’d like to get more (and extra details not
available to 99% investors), I invite you to stay updated with our
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Thank you.
Przemyslaw K. Radomski, CFA
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