After a violent decline in the price of silver you have to be either completely nuts or a perma bull to be bullish on silver, right? Wrong, there is also an alternative: be factual. What we observe in silver related data, particularly in one of our leading indicators, is a super bullish setup. Yes, this makes us really comfortable continuing to call for our bullish silver price forecast to materialize still in 2022.
Every market or stock we analyze needs to have leading indicators. Without leading indicator we cannot perform an analysis, we also cannot initiate an investment.
One of the leading indicators in silver is the USD, it’s a generally accepted leading indicator.
In our annual silver price forecast we also cover bond yields and gold as leading indicators for silver.
But there is one more, not well known, leading indicator that is key in our methodology: the futures CoT report. In sum, the short net positions of commercial traders is a stretch indicator for the price of silver.
Here is a correlation that we showed in this weekend’s alerts: every time net short positions of commercial traders fell below 40k contracts, in the last 24 months, the price of silver started a rally between 15 and 25 percent (in one case even 100% but let’s filter this out).
Now why is this important? Because the probability of a breakdown in silver is low. Moreover, and more importantly, if the USD is going to find resistance here, it might finally push silver above 28 USD.
This, and much more with more detail, is what we show with plenty of charts in our Trade Alerts and Momentum Investing weekend alert. We remain factual, we are no perma bulls nor perma bears, we filter out emotions, we stick to valid data points.