Silver stackers should see a bounce shortly
Thanks for viewing everyone.
This is typical TA, it might go up or it might go down (and I told you so in either case). But stick around anyway.
After silver's top of almost $50 in 2011 it has made a clearly identifiable ABC formation correction of the intervening 8 years. If you squint just right, you can see the 5 wave wave (C) down too (complete with shallow wave 4 triangle and deep wave 2 correction. Wave 4 does not cross-over any of wave 1 price action (orange box - that also denotes the steepest price change - normally seen in wave 3). Recently there is a bottom forming after a quick rise from $13.700 to over $21 and a slow and steady price drop back to the swing low (low of 13.635 in December 2015). What I tentatively expect is a bounce from that level to around $22 (hopefully higher - very possibly lower).
Retrospective fibonacci targets (to gauge if the correction is complete) are for wave (C) to equal wave (A) at ($13.768) and a 1.618 extension of wave 1 (at $17.032). Both have been met or exceeded. In my view this is a buy zone and I will be buying each month that the price is below $17.
A word of caution; looking back a little ways into the price history (not displayed) pre-1980 to today. Silver rose from a sub-$2 base to exceed $50 in 1980. It then completed an ABC correction down to mid $4 range. This was followed by a weak wave C bounce and then the price slowly sunk lower to bottom at $3.50 in 1992 (10 years later). So, while the count holds up the price still slipped slightly lower in $ terms (more in % terms) before trying to set a new higher high. So, what? So, I am prepared for a potentially very long accumulation phase (last one 20 years) and also a potential price subsidence to below $10 (which will not change my plan). Remember everyone, no weak hands okay. Silver has been seeing increasing industrial demand but has been dropping investment demand.
Why silver? Why not buy on an up-trending asset?
1. Silver is an asset with zero counter-party risk, and is my choice as a hedge against a (more plausible every day) debt crisis,
2. charts never repeat exactly, it could bounce strongly - but I don't expect it to set up for a new bull-run just yet,
3. The gold to silver ratio is indicative of silver being undervalued on a relative basis (hopefully when the GSR normalises to below 40 I will trade silver for gold - silver is my vehicle to acquire more gold,
4. If there is a currency / inflationary crisis, there will be little warning and I want to be in at the bottom for the next move up,
5. Silver is money,
6. COT commitment of traders reports show commercial traders reducing short positions significantly,
7. Commercial banks have created the worlds largest ever silver stockpiles - removing supply from the market.
Asset allocation: 50% fixed income instruments, 30% low PE ratio (low debt, high return, recession resistant) stocks, 5% diversified commodity ETF (at a 30 year low), 7.5% silver, 2.5% gold, and 5% crypto.
While I am here, I would like to plug bullionstar dot com in Singapore. They have low premiums, cheap vault storage of 0.59%pa (silver - lower for gold). E.g. A Johnson Matthey 100oz silver bar (as at right now- prices change per minute) is USD1545.05 for a low volume purchase on 1-9 bars (cheaper than one US based site I just checked at USD1575) and zero sales tax on bullion. I will likely choose their 1kg zero spread bar (at low volumes it has a spread but it is lower than normal) and possibly small nibbles from their bullion savings program BSP where I can buy as little as 1g at a time. I just thought I would pass than on because it took me a long time and searching multiple countries to find silver at a reasonable price.
This is typical TA, it might go up or it might go down (and I told you so in either case). But stick around anyway.
After silver's top of almost $50 in 2011 it has made a clearly identifiable ABC formation correction of the intervening 8 years. If you squint just right, you can see the 5 wave wave (C) down too (complete with shallow wave 4 triangle and deep wave 2 correction. Wave 4 does not cross-over any of wave 1 price action (orange box - that also denotes the steepest price change - normally seen in wave 3). Recently there is a bottom forming after a quick rise from $13.700 to over $21 and a slow and steady price drop back to the swing low (low of 13.635 in December 2015). What I tentatively expect is a bounce from that level to around $22 (hopefully higher - very possibly lower).
Retrospective fibonacci targets (to gauge if the correction is complete) are for wave (C) to equal wave (A) at ($13.768) and a 1.618 extension of wave 1 (at $17.032). Both have been met or exceeded. In my view this is a buy zone and I will be buying each month that the price is below $17.
A word of caution; looking back a little ways into the price history (not displayed) pre-1980 to today. Silver rose from a sub-$2 base to exceed $50 in 1980. It then completed an ABC correction down to mid $4 range. This was followed by a weak wave C bounce and then the price slowly sunk lower to bottom at $3.50 in 1992 (10 years later). So, while the count holds up the price still slipped slightly lower in $ terms (more in % terms) before trying to set a new higher high. So, what? So, I am prepared for a potentially very long accumulation phase (last one 20 years) and also a potential price subsidence to below $10 (which will not change my plan). Remember everyone, no weak hands okay. Silver has been seeing increasing industrial demand but has been dropping investment demand.
Why silver? Why not buy on an up-trending asset?
1. Silver is an asset with zero counter-party risk, and is my choice as a hedge against a (more plausible every day) debt crisis,
2. charts never repeat exactly, it could bounce strongly - but I don't expect it to set up for a new bull-run just yet,
3. The gold to silver ratio is indicative of silver being undervalued on a relative basis (hopefully when the GSR normalises to below 40 I will trade silver for gold - silver is my vehicle to acquire more gold,
4. If there is a currency / inflationary crisis, there will be little warning and I want to be in at the bottom for the next move up,
5. Silver is money,
6. COT commitment of traders reports show commercial traders reducing short positions significantly,
7. Commercial banks have created the worlds largest ever silver stockpiles - removing supply from the market.
Asset allocation: 50% fixed income instruments, 30% low PE ratio (low debt, high return, recession resistant) stocks, 5% diversified commodity ETF (at a 30 year low), 7.5% silver, 2.5% gold, and 5% crypto.
While I am here, I would like to plug bullionstar dot com in Singapore. They have low premiums, cheap vault storage of 0.59%pa (silver - lower for gold). E.g. A Johnson Matthey 100oz silver bar (as at right now- prices change per minute) is USD1545.05 for a low volume purchase on 1-9 bars (cheaper than one US based site I just checked at USD1575) and zero sales tax on bullion. I will likely choose their 1kg zero spread bar (at low volumes it has a spread but it is lower than normal) and possibly small nibbles from their bullion savings program BSP where I can buy as little as 1g at a time. I just thought I would pass than on because it took me a long time and searching multiple countries to find silver at a reasonable price.
Trade active:
Well, if it keeps going like this I am putting this in my "win column"
Trade active:
I will be purchasing a 100 oz 999.9 Royal Canadian Mint Silver Bar either this weekend or next week (depending on price action) at Bullion Star Singapore to add to what is intended to be a medium-term 2-4 year holding. Storage fees are the lowest I have been able to find for physically allocated investment grade silver at 0.6%pa.