Let’s get things straight when it comes to silver: its outlook is NOT looking good. The fact that the 2016 silver price rally stalled exactly at the 2008 highs which happens to coincide with a secular bear market trend line is really not good.
We strongly believe in the value of gold and silver, but we also learned – the hard way – to look with an unbiased view to unfolding trends through chart patterns. When looking objectively to the silver price chart, we read a strong message: silver’s bull market is not there yet. In other words, 2016 will not be the year in which the bear market evolves into a bull market, at least not from a secular perspective. Somehow, we still expect silver’s new bull market to start in 2017, but that will probably not happen in the first months of 2017, at least not based on the unfolding trend on the chart.
The path of least resistance is down, in particular towards secular support which comes in at $14 right now, but, when the price of silver has fallen until that point, it will come in around $15.
Our pricing thesis is based on rising yields. Intermarket dynamics are least visible to investors, but it’s the epicenter of all trends in markets. Right now, the most likely scenario is that yields will start rising, resulting in new trends in key asset prices like stocks, gold, commodities, currencies. Silver will not fare will with rising yields.
These factors would naturally negatively impact silver-focused ETFs as well, with the SLV particularly vulnerable to a pullback:
The iShares Silver Trust ETF (NYSE:SLV) rose $0.02 (+0.11%) to $17.69 per share in premarket trading this morning. The largest ETF tied to spot price of silver has risen 34% since the start of 2016.
This article is brought to you courtesy of Investing Haven.