When the dollar broke down over a week ago, silver joined gold in breaking higher, as we can see on its 4-month chart below, and now we are seeing a normal post-breakout reaction as the dollar rallies somewhat to relieve the extreme condition that resulted from its steep lunge.
Once the dollar’s relief rally is done, silver should resume the upward path.
On the 1-year chart, we can see that silver has started to emerge from a base that formed in July that is probably best categorized as a Triple Bottom, although it is a hybrid pattern.
How it copes with the considerable resistance in this zone, and it's still rather unfavorably aligned, moving averages depends to a large extent on how the dollar performs going forward and the course of interest rates — both are believed to have reversed to the downside, so the outlook for silver is favorable.
On the 5-year chart, we can see that silver has essentially been “in the doldrums” since its mid-2020 spike, and it is the more robust rise in the dollar and interest rates this year that eventually led to the support at the US$22 level failing.
Silver has been underperforming gold since early 2021, which is normal when speculative interest in the sector wanes and in the early stages of a new bull market which is where we are believed to be now, gold tends to outperform silver because it takes high and rising prices to attract broader investor interest and the arrival of speculators and we are still a long way from that.
So in the early stages of a new sector, bull market gold and gold stocks are generally the best places to be.
Much of what is written in the parallel Gold Market update, especially about the dollar, applies equally to silver and does not need to be repeated here, which is why the Silver Market update is shorter.
CliveMaund.com Disclosures
The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
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