Let me start by saying I am very bullish on silver long-term and believe prices will exceed $300 later this decade. In the meantime, however, I see the potential for a quick, possibly sharp decline into mid-February.
I say “possibly sharp” because price manipulators thrive in low volume environments encompassing Holidays – like Chinese New Year (February 12, 2021).
The spike in silver above $30.00 appears to have been a false breakout (possibly engineered). This sets the stage for a secondary breakdown, into mid-February. A bottom on or around Chinese New Year (February 12th) would present an excellent buying opportunity, in our opinion.
Silver has been unable to recapture the $28.00 breakout level increasing the odds for a false breakout. Slipping below $26.00 could trigger more selling and a breakdown to $24.00. If $24.00 fails, we could see a trip back to support around $22.00.
Gold is getting dangerously close to the $1800 support level. The next 36-hours of trading are crucial. If prices break lower, I’d expect a bottom around February 12th, followed by a strong uptrend into May or June.
Downward pressure is building after Monday’s failed breakout in gold and silver. If the breakdown in gold accelerates below $1800, expect a retest of the November $1767 low with a quick spike below $1750 possible. From a mid-February low, I’d expect a rally into May or June.
Our Gold Cycle Indicator is in maximum cycle bottoming (currently 42) and could reach a maximum bullish reading of zero in February. Precious metals would have to turn miraculously higher after Friday’s employment report to prevent a further breakdown.
AG Thorson is a registered CMT and expert in technical analysis. He posts daily updates to Premium Members. For more information, please visit here.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle that will begin to unravel in 2020.