When Exactly Will The Price Of Silver Start A Rally To $50?

The most popular question among silver investors is when the silver price will rally to $50. While pinpointing the exact of silver’s rally to $50 is challenging, two data points offer insights into the conditions required for such a significant price movement: CoT data combined with silver’s chart pattern.

This article provides insights into the conditions that need to be met in order for silver to start its next big run. In sum, we do expect the big silver run to start in 2023 and move to $50 in two phases.

The quest to predict the timing of a price rally is a common pursuit among investors seeking to better understand the silver market. Particularly, silver’s potential rally to $50 has captured attention due to its implications for traders and long-term investors alike.

As explained in our silver prediction, we hold our silver price target of $34.70 for 2024. This price target, once hit, will confirm that silver will move to $50, sooner or later.

Silver price rally to $50, really?

Yes, really, a silver price rally to $50 is what we are talking about.

Frankly, we are not interested in a rally of 20 or 30 pct, on the contrary. Silver is way too volatile to go after a small rally.

Note that silver has a track record of powerful rallies. Consider the 1980 silver rally:

In part due to the actions of the Hunt brothers the price for silver Good Delivery bars jumped from about $6 per troy ounce to a record high of $49.45 per troy ounce on January 18, 1980, representing an increase of 724%. The highest price of physical silver is hard to determine, but based on the price of common silver coins, it peaked at about $40/oz.

While a silver price rally to $50 may sound like a significant increase, the reality is that it’s neither exceptional nor extraordinary.

In current terms, a silver price rally to $100 would be an extraordinary rally.

Silver – the restless & trendless metal

The silver market, unlike many other markets, is unusually volatile, evoking emotions like fear and excitement, also testing patience of its holders, which prevents many of seeing the richness of patterns on its chart.

Silver is often called the ‘restless metal‘ because of its highly volatile nature. While silver has the ability to stage strong trends, in both directions, most of the time it is trendless. That’s why we would ‘trendless’ silver’s restless nature.

Here is the point with silver: it is BECAUSE of the fact that is trendless most of the time that it is such an interesting investment. The waiting is made up when it starts trending. The uptrend, which we expect to occur soon, is so powerful that you don’t want to miss out.

As explained many times, silver is working on a long term consolidation. The longer the duration of a consolidation, the more powerful its outcome. That’s why we are not concerned about silver’s prospects as long as it respects its 2022 & 2023 support area.

Silver supply shortage

In our analysis silver shortage, we stated:

The looming silver shortage stands out as a ticking time bomb. Despite COMEX silver price setting, the law of supply and demand will eventually prevail. As we approach a true silver supply shortage, the silver market’s true potential awaits, ready to reshape the price setting dynamics and elevate silver to new heights.

Indeed, the silver shortage is developing into a really serious problem. It seems to be getting worse with each passing month, as evidenced by recent data:

We believe that the physical market ultimately will take over control. Price discovery, orchestrated from within the silver futures market (COMEX) is not a sustainable price discovery dynamic.

Unless this physical silver market supply shortage resolves, which is very unlikely, the silver price rise to $50 seems inevitable.

Silver COT analysis

One of the tools at the disposal of traders and analysts is the Commitment of Traders (COT) report, which presents a snapshot of market sentiment based on the positions of different trader categories.

Currently, on April 14th, 2024, the silver COT report paints a bullish-to-neural picture:

• net positions of commercials and non-commercials are bullish;
• commercials are increasing their net short positions.

This suggests slightly too much interest to short the silver market, by speculators in the silver COMEX futures market. However, the readings are stretched, so some selling is required before silver can move higher. Alternatively, exceptional conditions like war or a supply squeeze can push silver higher, but only under really extreme conditions.

For a detailed explanation of this next chart we refer to our weekend analysis, shared with premium members of the Momentum Investing service, available in the restricted area This Is A Buy & Hold Environment For Quality Stocks.

On the flipside, obviously, comes the manipulation thought. Silver is experiencing a supply deficit, for 3 years in a row. How comes the price of silver is more than 50% below its ATH while all other commodities exceeded their 2007/2012 ATH?

Silver price chart: rounded pattern breakout might be last hurdle before the rally to $50 will start

Chart analysis often reveals patterns that provide valuable insights into future price movements.

The 12-month consolidation, since May 2023, hints at a bullish chart reversal which, if confirmed, should resolve to the upside in the current 3-month cycle March 2024 – May 2024.

Such patterns are considered significant as they indicate a shift in sentiment from bearish to bullish or vice versa. If the pattern breaks to the upside, it will confirm a secular breakout attempt. This breakout might signify the beginning of a new bullish phase for silver, possibly setting the stage for the anticipated rally.

Source – Tradingview

Moreover, the medium term oriented silver chart (above) should be complemented by the secular silver chart (below). As seen below, silver is now testing an epic secular breakout point. The falling trendline since 2011 is being tested for the 7th time in 4 years. This time might be different as the secular pattern nicely aligns with the cycle chart shown above.

Chart update – April 14th, 2024

Historical context

Silver’s history is marked by periods of significant price surges driven by various factors. Looking back, the metal has demonstrated its potential to deliver substantial gains within short timeframes. These historical instances underline the notion that silver is capable of sudden and powerful price movements. While history doesn’t repeat itself exactly, it does provide valuable insights into how external factors can propel silver prices higher.

Two stages of the silver price rally to $50

It’s important to understand that predicting a price rally to $50 doesn’t mean a single, uninterrupted climb. The journey could involve two distinct stages.

The initial stage might see silver moving toward $34.70, driven by a combination of technical and fundamental factors.

Once this stage is achieved, the path to $50 could follow. It will be supported by strengthening market sentiment, potential supply-demand imbalances, and external catalysts.

Conclusion

As investors eagerly await silver’s ascent to $50, a nuanced understanding of market dynamics and technical patterns is crucial.

Precise timing remains uncertain. However, a well-rounded perspective can be gained by:

• monitoring the silver COT report;
• analyzing price patterns;
• considering historical context;
• and acknowledging the potential for a two-stage rally can offer.

By incorporating these insights and analyses, investors can approach the silver market with a more informed outlook.

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