Silver 1 OZ 999 NY (XAG=X) undervalued relative to gold

Silver 1 OZ 999 NY (XAG=X) undervalued relative to gold

Silver 1 OZ 999 NY (XAG=X) undervalued relative to gold

Silver has blasted higher in the last couple weeks, far outperforming gold.  This is certainly noteworthy, as silver has stunk up the precious-metals joint for years.  This deeply-out-of-favor metal may be embarking on a sea-change sentiment shift, finally returning to amplifying gold’s upside.  Silver is not only radically undervalued relative to gold, but investors are aggressively buying.  Silver’s upside potential is massive.

Silver’s performance in recent years has been brutally bad, repelling all but the most fanatical contrarians.  Historically silver prices have been mostly driven by gold, with the white metal amplifying moves in the yellow metal.  Silver has generally leveraged gold by at least 2x in the past.  And rarely silver skyrockets as higher prices and bullish sentiment feed on themselves in powerful virtuous circles fueling huge gains.

Silver’s legendary upside is largely the result of it being such a tiny market.  Silver’s leading fundamental authority is the Silver Institute.  In its latest World Silver Survey covering 2018, it reported that total world demand ran 1033.5m ounces last year.  That was worth a mere $16.2b at 2018’s average silver prices, a rounding error in markets terms.  That was just 1/11th the size of last year’s world gold demand worth $179.4b!

The bottom line is silver really started outperforming gold again in the last couple weeks.  Silver surged dramatically on heavy investment buying, as evidenced by big differential SLV-share demand.  This looks like a sea-change sentiment shift getting underway in silver, especially after it was crushed to its lowest levels relative to gold in well over a quarter century.  Silver is long overdue to mean revert vastly higher.

Silver effectively acts like a gold sentiment gauge, with investment demand dependent on gold’s fortunes.  The longer gold consolidates high or grinds higher, the more silver will be bought.  Coming out of such radically-undervalued levels, silver’s future bull-market upside should greatly exceed gold’s.  But silver will also get sucked into periodic gold corrections, which can be used as lower entry points to add silver positions.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 15.50.

The projected upper bound is: 16.87.

The projected lower bound is: 15.99.

The projected closing price is: 16.43.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 34 white candles and 16 black candles for a net of 18 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 70.3184. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 69.37. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 1 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 72. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAG= closed down -0.012 at 16.388. Volume was -0% below average (neutral) and Bollinger Bands were 190% wider than normal.

Open     High      Low     Close     Volume___
16.410 16.512 16.300 16.388 0
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 16.16 15.17 15.09
Volatility: 22 18 18
Volume: 0 0 0

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

PREC.M.XAG= is currently 8.6% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into XAG= (bullish). Our trend forecasting oscillators are currently bullish on XAG= and have had this outlook for the last 37 periods.

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