CRITICAL SHORT-TERM SILVER PRICE TREND: Put into Perspective

The current silver price trend is once again at a critical juncture.  It has been four years since the price of silver crossed an important trend line.  However, the present setup will result in either another correction lower, or a much higher price.

This is a ten-year chart which shows the current trading setup for silver:

The blue line represents the 50 month moving average,and the red line, the 200 month moving average.  Since the price of silver fell below the blue line at the beginning of 2013, its support has been the red line.  It did not fall below the red line at its low in the beginning of 2016 and has bounced twice off the blue line, which is now acting as resistance by traders.

Currently, the silver price is hitting up against the 200 month moving average blue resistance line.  If the silver price breaks above and closes above it, we could see a much higher silver price.  However, if does not, then we could experience another short-term correction.

Looking at the current silver COT REPORT, there is a record commercial short position against silver.  The Commercial short positions are from the large bullion banks:

The red lines at the bottom of the chart represent the total Commercial net short positions in silver.  As we can see, it is at a record high.  This high Commercial net short silver position normally means the silver price will likely head lower…. over the short term.

That being said, I have become less concerned about the SHORT-TERM silver price movement.  While some investors are able to trade and make money trading silver, I am not one of them.  My focus on silver is to hold onto it for the LONGER-TERM.  Short term silver price movements are not a concern when we focus on the disintegrating energy and economic fundamentals.

Some precious metals investors have become frustrated or complacent due to the low silver price.  This is understandable because some may have purchased silver at a higher price and feel as if they made the wrong investment decision.  However, acquiring physical silver should be done over a period of time and be held as a SAFE HAVEN for the future…. just like any other retirement plan.

The BIG difference between owning physical silver and most paper retirement plans, is that the value of most retirement assets will most certainly plunge in value in the future while the price of silver will likely be much higher.  Unfortunately, most investors are either too impatient, fickle or lack the ability to understand this LONG-TERM fundamental setup.

Lastly, if Americans who are mainly invested in STOCKS, BONDS and REAL ESTATE, diversified into a small 2-5% allocation of physical gold and silver, it would totally overwhelm the market…. forget about the rest of the 7 billion people in the world.

Which is precisely why the MANIPULATION of gold and silver has been done mainly through psychology, rather than price.  Why?  Because the current algorithm pricing mechanism for gold and silver is based on their cost of production.  So, to see a current $18 silver price and $1,275 is not that ridiculous if it is based upon what it cost to produce them.

But, gold and silver behave much differently than most commodities, energy, goods and services.  While most commodities and energy are consumed, a lot of gold and silver are saved.  So, gold and silver must be valued differently.  If individuals realized the dire energy predicament we are facing in the future, they would realize it would be prudent to own some physical gold and silver.  However, they are being mislead by the Mainstream media, so they cannot really be blamed.

When the markets finally crack…. the Fed and Central Banks may have one last RABBIT to pull out of the hat, and that would be a HYPERINFLATIONARY event.  Unfortunately, this will not last long and will end quite badly.

Thus, when we reach this point… there is NO GOING BACK.  The United States and world will look like a much different place and at that point, it will be too late to sell paper and buy gold and silver.

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20 Comments on "CRITICAL SHORT-TERM SILVER PRICE TREND: Put into Perspective"

  1. How does the market turmoil from the Syria bombing affect you forecast? Did it or will it have any effect on the COT? Silver closed today at $18.33 bid which is $0.31 above the $17.92 50 month moving average which doesn’t seem to be about the bombing because it closed yesterday under $18.

    Good Article.

    Thanks,

    SteveW

  2. Good work Steve, thanks.

  3. Excellent article Steve. As a silver stacker i feel frustrated and impatient all at the same time. Reading this article gave me the extra confidence to hang in there.
    We know the bankers don’t have much time left and are doing really crazy things just to keep this fake system alive.
    We all need to keep stacking the physical before the price takes off. Then we can breath a sigh of relief. I think most can agree it has been a really rough ride for silver and for some stackers even more frustrated.
    Good job Steve

  4. By the time inflation really kicks in, gold and silver prices will be in grams instead of ounces. And even then, i won’t be interested in its “price”.

  5. What comes to mind is the old saying:
    Be careful what you pray for, you might get it.

    PM’s are a high quality rain coat for protection when the SHTF, but there will still be a mess that needs be cleaned up.

    • Long work gloves, wool socks, boots, hand tools, canned food and solar pv enough to charge small devices (a couple hundred Watts & 200A/Hrs). Prepare for a 9+ earthquake and most things are covered.

  6. I find it hard to believe silver can go too far below mining and refining costs. It seems to me we are already running below that cost. I actually like the long term prospects of silver because of the manipulation. At some point the world won’t have enough silver, and there won’t be enough new supply coming onto the market. It could take a decade for such an imbalance to work itself out. In the meanwhile I’ll just stack at these 1978 prices que the disco music.

  7. This article contradicts the last one. What about all of the paper thrown to bring doen the price. Now its psychology.

    • britt,

      I can see how you would think that. However, let me clarify. The majority of manipulation in PRICE is keeping investors funds flowing into STOCKS, BONDS & REAL ESTATE. While the Fed and Central Banks do manipulate the price of gold and silver, most of the INTERVENTION is done to keep Americans invested in STOCKS, BONDS & REAL ESTATE.

      Most energy, commodities, metals and goods prices are based on COST OF PRODUCTION. However, they are mostly consumed. Whereas, a great deal of Gold and Silver are saved. So, they must be valued differently. This is due to the ENERGY SITUATION we are facing.

      So, the majority of PRECIOUS METALS MANIPULATION is done via psychology. And that is… making sure investors stay focused on STOCKS, BONDS & REAL ESTATE.

      steve

  8. I am 99% certain that the commercial shorts (big banks) will win again here. Commercial failures are quite rare. I’m selling off my SSRI stock for now. I might even buy some silver PUTs as a speculation.

    When the break comes is anyone’s guess. I suspect it will have to wait until the gold COTs are more favorable to the shorts. In the meantime, the big banks can create as much synthetic short supply as they need to keep the silver price under control. JP Morgan has almost unlimited funding for its silver manipulation project. Rest assured, the price will NOT be allowed to hit $20/oz for now.

    As a silver stacker, I’m going to wait until they smash the price again to buy more. Might be able to get it for $14/oz. However, if you don’t own any silver, I would buy some now. A few dollars on sale is not worth it.

    I suspect the reason why the average investor doesn’t buy silver or believe in PEAK OIL (decling EROI) is due to an optimistic outlook and almost total ignorance of history. Americans generally believe in a linear history – thing always go one way and get better. You now have to about 90 years old to have experienced a world war and a depression as young adult. We are an apathetic people.

    For example, 15 years ago I gave a presentation about Peak Oil to a small group of people. Afterwards, a thoughtful woman approached me and said – “Ed, if this is all true, it means the end of the world, I’d prefer not to think about that”. In my presentation, I never even alluded that the consequences would be that dire. However, thinking about it further, I think she may be essentially correct, and that depending on how it plays out, I, personally, would not likely survive the situation.

    By the way when the SHTF, gold and silver will be useful, but other things will be even more useful.

    Water
    Food
    Heat and fuel
    Security
    Medicine
    Skills

    A russian who lived through the 1990’s, told me what worked.
    Some of the best trade items were small manufactured goods. razors, batteries, soap, cigarettes, etc. Gold is more useful afterwards or if you can flee a bad situation.

    • “I, personally, would not likely survive the situation.”

      all of our ancestors, for thousands of years, survived considerably worse environments. occasionally they even thrived. surely you don’t want to be the dead-end, do you?

  9. Jose Gonzalez | April 12, 2017 at 3:23 pm | Reply

    Solar energy is making the energy future very cheap. Aluminum is replacing silver in solar cells. The bright spot for silver is the looming shortage of it in the ground.

    • DisappearingCulture | April 12, 2017 at 3:34 pm | Reply

      “Solar energy is making the energy future very cheap.”

      Not true at all

    • The sun only shines half of the day. If you use aluminum instead of silver in solar PV, efficiency goes down. This is bad. Falling water and post-light-water reactors will be the power of the future for places with more people than a tiny village. Bring me batteries with power density half of gasoline, and I will grant you your solar wish.

  10. Check out the 10 min talk at TED.com by Kirk Sorensen on thorium. Kirk’s ex-NASA, so I believe he knows his stuff. Clean, portable (i.e. fit in an 18 wheeler), pollution-free, SAFE! (yup, idiot-proof and auto shut-down) nuclear power! I know, I KNOW! A pipe-dream. Oak Ridge National Laboratories, 60s and 70s. Funding pulled by our old pal Nixon who is, of course, enjoying absolute immunity from the blow-back from his crimes against our species and planet! Clean, cheap, safe energy? We can’t allow THAT!
    Got ten minutes to acquaint yourselves with the answer to mankind’s prayers?

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