No matter how tough conditions are for silver, we continue to see that its long term fundamentals remain ultra-bullish. It is a matter of time until our bullish silver forecast will materialize. All we need is a softer USD which might be close to a local top and not very far from a lasting top.
The U.S. Dollar created damage in markets, metals and commodities, particularly last week.
While we do not discount the damage that the U.S. Dollar is capable of doing, we also stay focused on the long term picture and fundamentals.
What we see in terms of fundamentals is absolutely fabulous. Particularly, the CoT report in silver is among the most bullish historically. If want to know more about how to read this CoT report we recommend following our Momentum Investing or Trade Alerts service and combine it with Ted Butler’s detailed analysis.
The short version is that the CoT report is sort of a stretch indicator. It indicates how much room there is to the upside and downside in silver (also in gold).
As seen on below chart, center pane, net positions of commercials are flat which is highly unusual. They tend to be net short. The more net short they are, the less upside in the price of silver. The opposite is true as well.
Complement this with this historic silver indicator that suggests a long term buy opportunity is here and you get a really nice mix of long term conditions that are supportive for silver investors.
Short to medium term, we cannot be excited, not yet, simply because of the disinflationary monetary policies causing the USD to remain strong.
Note that, for now, we believe that an inverted head & shoulders pattern in silver is in the making. This pattern is dominant until the Sept 1st lows give up.
In our Momentum Investing service we track a list of silver miners in our ‘shortlist‘ with the intention to flash a ‘strong buy’ whenever we believe the big move in silver will start (late this year presumably). In our Trade Alerts service we are auto-trading SPY but also covering silver in our weekend analysis.