Clive Maund - Mon, Jul 22, 2019

Silver Update: The Outlook Is 'Excellent'

The silver market is on the upswing but consolidation could be in the offing, according technical analyst Clive Maund.

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Some weeks back we had correctly surmised that gold's gathering strength would rub off on silver and cause it to start catching up, so we bought a range of silver ETFs and stocks, a move which has paid off well as they have spiked quite dramatically in the recent past.

Starting with silver's 10-year chart, we can see that its presumed giant double bottom is starting to look more and more like the genuine article, with the price starting to advance away from the second low of the pattern.

Silver has a marked tendency to "drag its feet" when a new sector bull market starts, which is why it has been so laggardly for much of this year. When we look at the latest four-year chart we can see another big reason why it could now get bogged down again for a while, for there is a wall of resistance just above the current price centered on the $16-17.50 zone. This, given the short-term toppy look of gold, could cause it to consolidate or react back now for a while. This is a big reason why we took profits in a number of our silver ETFs and stocks at the top on Friday morning, which had done very well last week.

Another reason for taking profits in some silver investments last Friday morning can be seen on the latest eight-month chart, for silver had arrived at the top of an expanding uptrend channel after a steep ascent that resulted in its becoming very overbought.

Silver's latest COTs do not look as extreme as gold's, but they show that last week there was a big rise in Commercial short and Large Spec long positions. Since this data is for the close of trade last Tuesday, we can presume that by Friday's close they were more extreme. Although they are not at levels that preclude further gains, it certainly wouldn't do any harm if they eased as a result of a correction.

Finally, here are the charts of a couple of silver investments that we sold, or at least partially sold, into strength after the opening on Friday. Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE), where we made 50% in a month, having bought it on June 14 at about $2.53:

And VelocityShares 3X Long Silver ETN, where we made about 30% in less than two weeks on our last purchase:

The conclusion is that while the medium- and long-term outlook for silver is excellent, a period of consolidation or reaction looks likely over the short to medium term.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Disclosure:
1) Clive Maund: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click below for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports (including members of their household) own securities of Fortuna Silver, a company mentioned in this article.

Charts provided by the author.

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