(Sunshine Profits, Dec. 1) Wednesday's session was nothing particularly new except for silver's performance, which is what I will focus on in my analysis of it today.
The silver market truly soared on an intraday basis, especially relative to gold. This is what we most often see at the tops or very close to them.
The Buying Frenzy
The reason is that the silver market is much smaller than the gold market, and in addition to the above (and in relation to it), silver is much more popular with the investment public. The latter tends to buy close to the tops and sell close to the bottoms. Consequently, the particularly strong performance of the white metal indicates that the investment public is "buying like crazy," and this, in turn, is a sign that a top is being formed. That's what we saw yesterday.
Interestingly, silver's rally yesterday was accompanied by yet another daily rally in the main stock indices. The S&P 500 moved above 4,000 once again, especially initially, and it was during this sharp rally that silver rallied the most. This tells us that perhaps similar buyers (the investment public) were buying stocks, and it serves as a small indication that stocks might have topped as well (or that they top in stocks could be just around the corner).
Technically, it was yet another move to the 50% Fibonacci retracement, so it didn't change anything. The only new indication was gold's outperformance, and it has bearish implications.
When looking at silver from a long-term point of view, it's still obvious that the recent move higher was most likely just a corrective upswing.
Will There Be a 2022 Repeat?
What happens after corrections are over (as indicated by, i.e., silver's outperformance)? The previous trend resumes. The previous trend was down, so that's where silver is likely headed next.
Besides, the long-term turning point for silver is due in several months, and if silver repeats its previous 2022 decline, then it will bottom close to the turning point and also close to its 2020 low – in the first half of 2023.
It's likely to repeat its previous 2022, because that's what tends to happen after flag patterns, and what you see on silver's short-term chart between September and yesterday appears to be a flag pattern.
Consequently, the current silver price forecast remains bearish, as does the outlook for the rest of the precious metals sector.
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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.