What’s inside:

  • Silver prices holding up better than gold, but doesn’t mean its bullish
  • Admittedly, silver not yet where we thought it would be, but still bearish
  • It would take a strong push into the mid-17s to flip the script

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Silver prices have not been cut down like gold prices have, not even close. Silver has actually strengthened in the past couple of weeks while gold is lower. The inverse correlation between precious metals and the US dollar grew to nearly 1-to-1 during the second half of November until recently when gold kept declining despite a softer dollar. Silver has kept up on the strength of its inverse correlation to USD for the most part (21-day = -92%, low was -96%), but even with the dollar declining it’s not finding a rush of buyers. Not even yesterday when the US Dollar Index (DXY) reversed sharply to the downside was silver able to find good sponsorship.

There remains room to head lower before thoroughly testing the next area of significant support in the vicinity of 16/15.80. Admittedly, we figured it would have been there by now, and worse given how weak gold has been. From the low 17s to that zone around 16 there is an air pocket, nothing price-wise to the left which suggests it shouldn’t reach lower before finding support.

When the market doesn’t play out as planned, though, we need to heed its caution. But with that said, we’re still bearish as there isn’t good enough reason yet not to be in our book. The trend in silver is still clearly pointed lower, it’s trading below key resistance in the low 17s, and, to a lesser degree, there is resistance at the lower parallel matching the trend-line off the July spike high. It’s possible a wedge will develop in the days to come, but we’ll need to revisit that scenario at a later time should it become relevant. For now, as long as silver stays below resistance in the low 17s we remain cautiously bearish. A strong daily close in the mid-17s would at least side-line our bearish bias, and possibly warrant turning bullish.

Silver: Daily

Silver Prices Hold Despite Gold, but Still Lean Bearish

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---Written by Paul Robinson, Market Analyst

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