Silver (SIZ25) fundamentals remain solid as geopolitical hotspots around the globe continue to produce safe-haven demand, generally easier world central bank monetary policies that hint of better consumer and commercial demand for silver in the coming months remain in place, and major industrialized countries hoard “rare-earth” minerals, including silver.
However, Thursday’s price action in December silver futures saw a bearish “key reversal” down pattern form on the daily bar chart — whereby a new contract high was hit early in the session. So Thursday’s daily price high was above Wednesday’s daily price high. Prices Thursday then backed off sharply to close solidly down, with the session low price being below Wednesday’s low. The key reversal down is one technical clue of at least a near-term market top being in place for silver.
I’m not presently calling myself a silver market bear, However, I do follow and respect trading history in markets. I firmly believe that history repeats itself in market price action. Time goes on but human nature does not change, and that goes for traders and investors, too.
See on the monthly continuation chart for nearby Comex silver futures that price action in January 1980 saw silver peak at an all-time high of $50.36 an ounce, basis nearby futures. It took over 30 years for silver to challenge that 1980 record high — doing so in 2011 when nearby futures prices reached $49.52. After that it took 14 years for silver to this week take out that 2011 high on the upside, but just by $0.44, as nearby silver futures this week hit a high of $49.965.
In 1980 the price of silver futures traded above $40 for just one price bar on the monthly chart, meaning one month. In the following years, silver prices eventually dropped to a low of $3.51 in 1993.
In 2011, the price of silver futures stayed above $40 for just two price bars, before selling off sharply and then seeing a brief punch back above $40 two months later. After that and in the following years, silver prices eventually dropped to a low of $11.735 an ounce in 2020.
While silver market fundamentals remain bulliish, if chart price history repeats itself again this time, the major bull market run in silver may be over, or close to it. Remember, too, that markets price in, or discount, expected future fundamental events well before they ever fully play out. Silver bears can argue that is the case now, given the recent surge in prices.
