Silver’s Soar: Could It Reach $50/Ounce This Year? | chart watcher

According to analysts, the possibility of silver reaching $50 an ounce this year is a “realistic possibility.” A more conservative but optimistic forecast sets a target range for silver between $35 and $50.

What are driving the optimistic outlook?

• Global silver supply is expected to increase amidst a global supply deficit for four consecutive years.
• The surge in demand for silver reflects both financial and industrial interests.
• And finally, the gold-silver ratio is currently high (between 85 and 90), which suggests that silver is undervalued.

A macro look at silver’s history and current price targets.

Chart 1. Silver futures ($SILVER) monthly chart. Note that there is a wide range of analysts’ price targets at the moment. Chart source: StockCharts.com. For educational purposes.

A look at the monthly 15-year silver chart shows that “poor man’s gold” has not reached anywhere near $50 an ounce since its surge in 2010. Several analysts have set price targets starting at $35, but silver faces significant resistance at $30 (see blue dotted line), which stems from the 2020 and 2021 highs.

Another thing to note is that almost every instance where the Chaikin Money Flow (CMF) indicator rises above the zero line, silver tends to surge relatively significantly (except in 2017).. CMF is currently sending this signal. Could this be the start of another significant price rise?

Now that we can look at the macro picture, let’s look at the short term.

Chart 2. Silver futures daily chart. After a long period of range-bound trading, silver is finally free. Will this breakout falter like previous attempts, or will it lead to a price surge that meets analysts’ expectations? Chart source: StockCharts.com. For educational purposes.

Looking at the 6-month daily chart, silver is starting to outperform the Invesco DB Commodity Index (DBC), a broad commodity index. Silver’s performance against gold is rising, but it is still undervalued compared to the yellow metal. This is generally an optimistic sign.

However, note the difference in momentum between the price of silver and the Money Flow Index (MFI), which is a type of volume-weighted relative strength index (see the decline in the blue line on the MFI indicator).

The last candle is also a top (the closing price is lower than the opening price) with a 51% chance of a reversal (according to performance research by technical analyst Thomas Bulkowski).

Assuming your predictions are consistent with analysts who expect silver prices to surge to $35 or even $50 an ounce, what should you expect if silver prices reverse to the downside?

Notice the two black lines on the chart that mark the two most recent swing lows. If the price falls below these two lines, both lines must If overall market sentiment is bullish, providing support, we can assume that silver will return to its trading range cycle.

Things to watch out for

For silver bulls, it all boils down to this: Will the current breakout push silver to new highs or will it retreat back into its trading range?

Long-Term Momentum (via CMF) monthly scale) presents an optimistic scenario, but results may take days or weeks to appear. Near-term conditions indicate that silver is likely to fall. The most important thing to watch is whether silver bounces below its recent swing lows or declines. If strength is favorable in the short term, a rebound can be expected. Otherwise, the price is likely to revert to a trading range cycle.

conclusion

Analysts and industry experts highlight the growing interest in silver, coupled with supply constraints and its pivotal role in green technologies, making it a metal to watch closely in the coming months. However, the technological outlook presents complex scenarios that require careful consideration of mixed and conflicting factors. More fundamentally, if the consensus analysts are correct, signs of an expected bullish outcome should be clear technically.

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.