Silver is pulling back sharply and it’s worth noting in the context of the broader market and trading or portfolio setups.
But before getting into that, it’s worth noting that not much has changed in the world of inflation predictions.
The dollar is rangebound.
The yields have topped out.
The Federal Reserve has stagflationary issues to contend with.
Raw material supplies are low.
Geopolitics remain an issue.
Employment costs are rising.
The government debt remains high.
Money supply bottomed out in 2023.
Government spending has not abated.
But-
The consumer is starting to shift with consumer confidence coming in a lot lower than expected.
This in turn shifts market sentiment to recession and low demand, hence, lower inflation.
So, what about silver?
This precious metal has had a big correction off the recent highs, yet now the price is approaching the support levels where it broke out from in late March.
Plus, every time the bears have come out on the metals, or oil for that matter, it has been a new buy opportunity.
Is this time different?
On the monthly chart not featured here, silver spent 7 months above the 23-month moving average or in a bullish 2-year business cycle.
On the futures chart of May (spot) featured here, on April 2nd, silver cleared $26.00, a level not cleared since April 2023.
To the argument that silver has topped, looking back at April 2023, we could make the best argument.
Silver cleared $26 but for only 3 weeks. Then it gapped lower in early May 2023 and did not clear that level ($26) again for a year.
Is that make this time bearish?
Maybe more a reason that silver is taking time to really go parabolic.
If silver futures break under $24 at this point, we would concede our bullish bias longer term.
For now, though, we like it when the weaker bulls shift-it gives us a chance to add to a position with a much better risk.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
