Looking at the next chart, you will find a clear trend in motion. Undeniably. And still, there is always this feud between fundamentalists and chartists. In our opinion, any extreme view of trading is unhealthy. You want to have an open mind and let the market lead you along. The principle is that charts encompass all market participants’ opinions, and as a sum, this entails all interpretations of fundamentals. While chartists love this argument, it overlooks that fundamentals are essential to evaluate a long-term market. This is especially significant when history changes on a more dramatic scale. A million reasons to buy Silver.
Silver, Weekly Chart, Multiyear range break, significant trend, range, and?
We are at such a significant point in history where fundamentals are more important for long term wealth preservation prediction than usual. Here is why:
- U.S. debt is at US$27 trillion.
- With the transition of the current presidency and the need to print enormous amounts of money to fund national vaccinations, future monetary expansion is inevitable.
- Silver is the only deflationary asset that’s left that has lost value since the 1980s. While some investors might think this is a good reason not to buy Silver, a contrarian or counter-intuitive approach would find an opportunity in something so undervalued.
- The greater the amount of currency in circulation, the greater the potential money flow they can trail into precious metals. When the economy collapses and cashflow comes flowing out of the stock market, it will find its way back into precious metals, and prices will rise.
Gold/Silver Ratio, Monthly Chart, Still room to catch up:
But this isn’t all. As of December 11, 2020, Silver’s one-year price change is up 41.94%, and gold’s one-year price change is up 24.75%. Looking at the monthly Gold/Silver-Ratio chart above, we can see that there is still plenty of room for Silver to catch up. We even have support here right now, which would point out that gold runs first again, and then Silver is under pressure to follow.
Monthly Chart of Silver, Forecast:
Silver is looking very bullish by not having retraced deep in its sideways range since March of last year (27.5%). Therefore, we find it sensible to look at fundamentals more closely when it comes to larger timeframe target projections. Metal prices are strongly correlated with the economic meltdown. So if the banks are too big to fail and keep forestalling inevitable problems into the future by ongoing money printing, we can continue to see prices remain less than stellar. Only when fear strikes the masses will the money leave the stock market and ultimately find itself into precious metals. Is COVID-19, the pandemic, that catalyst?
A million reasons to buy Silver:
The disparity between economic conditions in corporate earnings will not post well for equities forever. Investors are building up alternative hedges. We have seen massive profits in Bitcoin. If “exotics” get attention like this, a more radical shift in common alternatives like Silver might be ahead.
JP Morgan has decreased their short positions after years of accumulating Silver. It leads one to believe that with rumors of J.P. Morgan’s massive silver accumulation, it’s relinquishing recent silver short positions. It could portend a future where silver prices can no longer be manipulated as they once were, as the main manipulator has decided to cash in.
With history changing so fast and a million reasons for owning Silver, it is wise to look at markets from both sides. A fundamental and a technical one. More than ever!
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About the Author: Korbinian Koller
Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.