Silver has acted very strong in 2016. However, silver miners have been the real deal.
We observe some potentially concerning facts when it comes to the metals. First and foremost, the whole world is favoring precious metals, which is, from a sentiment point of view, a red flag.
From a chart perspective, we see that silver has reached an incredibly important area right. It is no surprise that three trendlines of secular importance coincide within that area.
We consider this the real ‘make or break level’ for silver, say the decision point of a bull market vs a bear market. In other words, if silver will be able to overcome this area, we have a confirmed signal that silver is in a sustained bull market. Otherwise not.
Given overly enthusiastic media and investors, as well as the chart setup, we believe there is a small chance that silver will go higher from here. That is a forecast, not a fact though. We keep on looking at the precious metals space with an open mind, but the odds do not favor a continuation of silver’s price rally, on the contrary.