The silver price keeps on consolidating in a rather narrow range 26.6 – 29.9 USD an Ounce. While many silver investors get nervous, checking the silver price every day, they seem to miss silver’s big picture: the very bullish case on silver’s 50-year chart.
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Silver, that famously “restless metal,” has a knack for baffling both bulls and bears with its sudden and sharps swings.
But here’s the truth: despite its notorious volatility, silver’s long-term trend which is unfolding on its secular chart is the only thing that should matter to investors.
Let’s break it down with a top-down approach, looking at silver’s 50-year historical price chart, and then add a secondary indicator in currencies (the silver-to-AUD ratio). No matter how we look at it, our bullish silver prediction remains intact.
Silver price today?
One mental dynamic that most investors are not used to handle (even not recognize) is this:
The more volatile a market or asset, the higher the intuitive need to check its price.
When applied to silver, especially those days when silver moves significantly (up or down), investors tend to be sucked into the short timeframe.
What’s the silver price today, is the intuitive reaction. The emotional system of the individual sends a signal to the mind which then takes over control.
This is of course amplified by social media where the shorter timeframes are the most popular ones.
In this illustration, we see the content creator focus on the 4h chart. While this timeframe can be useful, the particular silver charts were created without showing the dominant trendlines and chart patterns from the higher timeframes. Not really useful for investing purposes, to put it mildly.
$SILVER slight update.
Also see $GDX which tends to be a good analogue for Silver.
NOTE: A move below the recent lows would likely negate the projected move higher. pic.twitter.com/eX2Fa4DY5X
— Silver Surfer August 30, 2024
Similarly, this illustration misses the big picture dynamics.
$SILVER Looks to be in a Wave (iii) off the lows, we could see a mild to moderate retracement for a Wave (iv) before the wave (v) and completing the larger Wave 1.
At that point we could see a more substantial pull back for 2 and then the party really gets going imo.
Note:… pic.twitter.com/mdkApSXhuz
— Silver Surfer August 19, 2024
Remember, short term price moves may be completely irrelevant and meaningless in the grand scheme of things. The silver price today does not matter nor is the day-to-day news relevant.
The 50-year silver price chart: Bullish case for silver
That’s why we focus on the dominant patterns.
Silver’s secular chart, particularly the 50-year silver chart, features this one dominant pattern that’s hard to ignore: a classic “secular cup and handle.”
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This isn’t just any pattern; it’s a mega-sized formation with a long cup (a lengthy price decline) and an equally long handle (a period of consolidation), culminating in what promises to be a powerful breakout.
Over five decades, silver’s price has mostly been flat with occasional spikes.
But the real takeaway is the sheer magnitude and longevity of this pattern to which ‘the longer the stronger‘ applies.
The Silver to AUD ratio
Let’s layer in some extra analysis with the silver-to-AUD ratio.
We featured the historic relationship between silver and the AUD ratio in this analysis Silver Is Ridiculously Undervalued ** 7 Must-See Charts ** published a few months ago.
Historically, silver tends to lead the Australian Dollar (AUD) higher due to the AUD’s strong ties to the commodity complex. Right now, the silver-to-AUD ratio chart is flashing a bullish reversal. This suggests that silver is primed for a relative appreciation against the AUD, objectively confirming silver’s bullish secular outlook.
The AUD is consolidating at a significant level, but this bullish reversal in the ratio highlights a potential divergence. If silver starts outperforming the AUD, it could signal the beginning of a major breakout.
Silver long term bullish
In summary, silver’s long-term charts paint a compelling picture.
The 50-year secular cup and handle pattern hints at a significant bullish trend, while the bullish reversal in the silver-to-AUD ratio further supports this positive outlook.
For investors, it’s clear: keep an eye on both historical patterns and current market signals. Silver’s future is bright, and its current restlessness is just a precursor to the big moves ahead.
