First, just like COMEX gold had $1550 to beat on a weekly closing basis, COMEX silver has an important target too. And what is that level? There's no doubt that it's $18.50. Until COMEX Digital Silver finally finishes a week above this key level, price isn't going anywhere. Don't believe me? See below:
What's fun is that there is finally some hope that will happen quite soon. On the daily chart below, note the clear emergence of a reverse head-and-shoulder chart pattern. Not only does this pattern reinforce the importance of $18.50, it also shows just how close we may be to breaking through to the other side.
Well, whether by design or by fate of algorithm, the mining shares now closely track SILVER instead of gold. And, of course, this makes zero sense! Why would a basket of junior gold mining shares rise and fall with the price of silver? The most likely answer is that we have 21st century automation to blame. We all know that the vast majority of equity trading now falls to the pre-programmed HFT computers, and quite obviously, many of these machines take their cues to buy or sell mining shares from the directional trade of silver. Again, don't just take my word for it. See the charts below, where COMEX silver is displayed in candlesticks while the shares of the GDXJ appear as a blue line:
Thus we conclude with the old adage: Sit tight and be right. Watch those key, technical levels and allocate your assets accordingly.
Craig Hemke, TF METALS REPORT
Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.