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Asset Watch

Is silver poised to slide to $15?

 

Tuesday, June 14, 2022

With the U.S. Consumer Price Index (CPI) increasing by 8.6% year-over-year (YoY) on June 10, inflation is abundant in the world’s largest economy.

 

But while gold jumped by more than 1% on June 10 and mining stocks soared by more than 4%, silver increased by less than 1%. As a result, the daily underperformance is disappointing, considering silver is a high-beta metal that often outperforms during rallies.
So is the relative weakness an ominous sign?
Is silver poised to slide to $15?

Silver’s monthly chart is eerily similar to the 1980s. For example, after recording a parabolic spike, silver cratered, rallied, cratered, rallied, and then a final swan song sent it below $10 for roughly 20 years. The arch symbols on the left side of the chart show how lower lows were present during each upswing.

Similarly, the arch symbols on the right side of the chart show how resistance materialised each time silver attempted to recoup its prior highs. More importantly, silver’s third and final leg down in the 1980s occurred after the MACD recorded a sell signal – which is depicted by the blue line at the bottom of the chart crossing the orange line from above.

Likewise, a sell signal is present today. So with the $22 range marking long-term resistance in 1980, 2008 and 2016, is silver poised to re-test $15? For context, the level coincides with the 1983 and 2006 highs and the low-end ranges from 2010 onward.

A cause for pause?


Site by Pink Green
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