Interestingly we have seen several precious metals analysts suggest that something quite interesting is taking place in the silver market. For example, Alasdair Macleod wrote an article;AWhale Is Accumulating Silver Futures, implying that the Chinese government may indeed be acquiring a significant long position in the silver market. Macleod believes China may be going long silver, via the futures market, to protect its supply by hedging as the price heads higher in the future.
When I went back and looked at the long-term gold and silver charts, I saw that the large price BREAKOUTS occurred at certain key levels. Why was this the case? Well, it seems that when the gold or silver price broke above a key level, it came on the RADAR of traders, hedge funds, investors, and institutions. Thus, breaking above or below these key levels brings on a great deal more interest and trading volume.
So it’s essential to understand that while the fundamentals are the underlying drivers of price, the key technical levels provide the BIG PUNCH or huge increase in BUYING or SELLING depending on the technical setup. I ignored this information for years, but will no longer.
In the 20-year monthly chart of silver, the price has been bouncing off the lower rising trend line (blue dashed line) since 2004. Not only is this an important technical level for silver, but it also shows a BOTTOM for the price as $15 is now the average cost to produce an ounce of silver by the primary mining industry. If we go back to 2004, the primary silver mining industry was producing silver at about $5 an ounce. Thus, the cost to produce silver has tripled in 15 years… AND THE TECHNICAL LEVELS SHOW IT.
Independent researcher Steve St. Angelo (SRSrocco) started to invest in precious metals in 2002. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.
Steve considers studying the impacts of EROI one of the most important aspects of his energy research. For the past several years, he has written scholarly articles in some of the top precious metals and financial websites.
You can find many of Steve’s articles on noteworthy sites, such as GoldSeek-SilverSeek.com