We are thinking big in this update on silver and I mean BIG. Although silver has been advancing for months now it’s only just over 2 weeks ago that it broke out of the giant holding pattern that it has been stuck in for about 45 years, the enormous Cup & Handle base that was described on the site several months ago. The technical implications of this development are MONUMENTAL - it means that the silver price is headed to levels that will seem unimaginable to most investors and here’s the thing – this scenario is fully backed up by the fundamentals – the extreme supply crunch for silver that is right now starting to impact is the result of a truly extraordinary confluence of factors – a multi-year supply deficit that is suddenly creating an acute shortage due to increasing demand for physical silver for industrial purposes for use in many modern applications against the background of silver being declared to be a “critical mineral”, coupled with a surge in investment demand as the current fiat money system flies apart, amplified by Central Banks now acquiring silver as a monetary metal. Making the situation even worse is that the multi-year supply deficit has literally been “papered over” by price suppression for many years on the paper markets with the lid being kept on it by unbacked and leveraged shorting on a vast scale. This has created a truly explosive situation that can be likened to a pressure cooker whose lid is about to blow off. So now we will revisit our CHART OF THE AGES that shows the enormous 45-year Cup & Handle pattern with the price up to date as of last Friday. The most important point to make regarding this chart is that this huge pattern can clearly support a massive bull market, whose minimum price objective is equal to the height of the Cup & Handle on this log chart. Such an advance puts the price somewhere in the hundreds. The 2nd most important point to make is that at the end of November, on the 28th to be exact, the price finally broke decisively out of this enormous pattern to commence a bull market that promises to be of epochal proportions and the final and related point is that, as we can easily see, despite silver looking like it has risen a lot on short-term charts, this new bull market has only just gotten started – it is still in its infancy.
Without wishing to sound florid, you have probably all heard the cautionary admonition “not to go betting the farm” on something. My view is that not only should you go betting the farm on silver at this time, but pretty much anything else you can lay your hands on.
Zooming in now via the 6-year chart – this time period selected to show the Covid Crash low in 2020 when the silver to gold ratio pluned to an extremely silly record low as the world population were subjected to the biggest orchestrated psyop of all time – we can see how silver has been advancing in a steadily accelerating uptrend from its 2022 lows. Superficially, it looks like it ought to consolidate for a while or react back here because it is near to the top of this channel in an extremely overbought state. However, the extraordinary fundamental and technical conditions that now exist mean that instead we could see a full-on meltup and it is in position to melt up because it has broken out of the 45-year holding pattern and also above the upper rail of the channel shown on this chart. A meltup means that despite being overbought it will continue to advance in a very steep uptrend, only pausing briefly to allow the overbought condition to ease somewhat, these pauses probably taking the form of brief Flag or Pennant patterns.
It’s worth reviewing recent action in detail on a 4-month chart. You may recall that we had thought that a corrective C-wave down to a point near to or below the late October low was likely. The setup is so strong that it didn’t happen, so we swiftly revised our thinking in light of developments and is now clear that the stunted C-wave that did occur which found support above the rising 50-day moving average and well above the late October low served to create the “Handle” of a small Cup & Handle continuation pattern with the entire consolidation pattern from the mid-October peak also being a bullish Ascending Triangle that led to the momentous breakout on 28th November, a day that should go down in the history books as one of the greatest days in the history of the silver market, if not the greatest day. Following the breakout a small bull Flag formed early this month which led to another upleg that has resulted in a very overbought condition. While it may take a little rest here, conditions are now perfect for a total meltup to occur in silver where it continues to advance steeply to higher and higher levels, overbought or not. In this environment silver stocks that have been “dragging their feet” lately, such as Aftermath Silver (AAG.V) and Couer Mining, CDE, should get their act together and take off strongly higher.
Lastly, the long-term silver over gold ratio chart also going back to 1980 makes clear that the retail crowd are still not involved in the Precious Metals market for when they are this ratio is at a much higher level. Although the ratio has risen in recent months it is still at a relatively very low level. The rationale behind this is that when the retail crowd get involved they favor silver over gold because of its leverage. The still low level shows that this bull market is remains in its earlier stages with much more upside ahead of it.
This 10 mins video The $150 Silver MELTDOWN clarifies a big reason for the intensifying supply crisis, the refining capacity bottleneck, although it should more properly be titled The $150 Silver MELTUP and this is a very conservative target.
End of update.
Posted at 2.15 pm EST on 13th December 25.
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