Could A Commodity Rally Help Spark Silver?

Sprott Money's picture

 

Could A Commodity Rally Help Spark Silver?

Written by Craig Hemke, Sprott Money News and TF Metals Report 

Could A Commodity Rally Help Spark Silver? - Craig Hemke

 

While it is widely believed that commodities are one of the few "undervalued" sectors, sustained rallies have been hard to find over the past few years. Could all that be finally beginning to change?

 

The key to any commodity rally is weakness in the US dollar. Most commodities trade in dollar terms so a rising dollar generally puts pressure on the sector. In contrast, a falling dollar is usually good for the sector. As you can see in the chart below, the general trend since 2015 has been a flat to falling US dollar as measures by the Dollar Index:

 

 

It could be argued that the two most globally-important commodities are copper and crude oil. Let's start with copper where, for the past year or so, we've been following a growing bottom and breakout on the chart. Does this look to you like a bear market or a reversal and switch to a new bull market, instead?

 

 

And now look at WTI crude oil. Note the similar chart pattern to copper. Could a move into the $60s be construed as a breakout and renewed bull market after a three-year bottoming process?

 

 

With dynamic rallies already underway in other commodities such as zinc and palladium, the question becomes...Are we in the early stages of a renewed bull market for commodities, in general? On the chart below of the the Continuous Commodity Index, you can see the possible beginnings of a turnaround.

 

 

What might this mean for silver which, despite its long history as a monetary metal, is now currently perceived primarily as an industrial metal and considered a "commodity"? If we view Comex silver through the same five-year lens, we note a reverse head-and-shoulder bottom, similar to those seen on the charts of copper and crude. However, we also note that unlike copper and crude, silver has yet to begin a rally of any consequence.

 

 

What to make of all this? Actually, it seems rather simple. Should the commodity rally continue, it will begin to take on a life of its own, with global money managers and asset allocators recognizing the new bull market and creating a virtuous cycle of higher prices through their inflows of cash to the "undervalued" sector. In this case, copper will move higher and toward $4.00 while crude oil breaks through $60 and heads toward $80.

 

If this happens, we could imply a price of silver that easily reaches the mid-to-upper $20s sometime in 2018. Is this possible or would/will The Banks be able to keep their collective thumbs on the price? Your answer to that question will depend upon the size and scale of the cash flow into the sector.

 

So again, it may be rather simple. Resolution of this will be a function of the dollar, copper and crude. Forecast those three for 2018 and you'll likely be able to correctly forecast the price of silver, too.

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

Could A Commodity Rally Help Spark Silver?

Written by Craig Hemke, Sprott Money News and TF Metals Report

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Salzburg1756's picture

Incoherent nonsense.

BobEore's picture

Well...
at least you came out! That's sumthin. As the Orangeman might say.

Thanks for playin.

kahplunk's picture

"silver will go from 'lying in the streets dirt cheap' to 'no bid.' As in not traded. With almost no notice... and little space in between. Unless you be lucky nuff to time that short n sweet window of opportunity with exactitude...

it's 'hello bagholder'.. all over agin!"

I do not get your point here. Demand in solor and a failing western state makes silver less store of value? Even to say "not traded" you lost me. All I see at the street level in America is a failed state not doubt about it. Drug use broken homes as far as the eye can see. A nation bringing in mass immigrants to try and prop it up. It's the Dutch boy with his finger in the dam.

BobEore's picture

I understand. Allow me to expand... pon

No bid/a pithy description of what happens when the market for an item is 'frozen'... for "reasons" which can vary, but ultimately come down to the need of state authorities to sequester that item for a specific use.

The coming shortage of silver - of natural causes, by 2035-60, depending upon who you talk to...

with be speeded up artificially by the 'un-natural' sequestering of the shiny metal by the state players referred to above. A ploy which not only allows them to pursue an 'energy independence' program in which silver is a vital component, but removes that same item from use by the western powers in an equally vital capacity as part of their weapons systems.

Two birds/one stone. Silver can 'store value' till the water buffalo come home, but in a situation where no one is allowed to trade the thing because of its' vital importance to state players...

that is a merely theoretical element of its' soon to be contemporary situation... much like saying ...unicorn horns are a store of value - cause there ain't any!

Now... back to you! I'm curious:

"All I see at the street level in America is a failed state not doubt about it. Drug use broken homes as far as the eye can see. A nation bringing in mass immigrants to try and prop it up. It's the Dutch boy with his finger in the dam."

Please draw out the connection between that... and the value of silver. I honestly don't get what it is.

BobEore's picture

...So again, it may be rather simple. Resolution of this will be a function of the dollar, copper and crude. Forecast those three for 2018 and you'll likely be able to correctly forecast the price of silver, too.

Actually, it's even MOAR SIMPLE than our dean of the 3 TOWERS SKOOL of Pseudo-scientific entrail-gazing wishes us to believe.

Silver has much less co-relation to those 'other' commodities than it does to the long range plans of an entity known as CHINA LLC. Those plans - plain and visible to all who might can to simply look and read what the Communo-capitalist roaders themselves are saying...

include the massive investment into renewable energy... with the goal of reducing petro-dependence/diminishing the environment threat posed by the current energy system, lessening dependence upon foreign sources of critical resource components... and... improving the Chinese economies competitive position vis a vis input costs.

Thanks to the diligent pioneering work of one THEODORE BUTLER = consistently contrarian voice within the metals community unafraid to dump consensus-trace theorizing in favor of 'jus the facts' sort of investigative work, we've been able to discern the meaning and purpose of the Sinitic 5 yr Plan(s)in regard to shiny metals for some years now...

but not allowed to talk about them, do to the incessant high-pitched screaming invective, projective-vomiting and general carryings on of a small but incredibly noisy clique of (moneypower sponsored)morons who have owned the medias' space for far too long... and to the great disadvantage of investors who sought to make some critical asset allocations decisions with rational forethought!

These factional voices have not only shouted the TEDDSTER down repeatedly with their smug declarations of monopoly over truth in media... they have rendered comment pages like this on devoid of actual debate, sharing of information, and the kind of reasoned discussion which is necessary to any real evolution of understanding the opaque world of shiny stuff!

Stuff that - says I. Stuff yur 'turds' right back in yur stools skat-stakkin serial losers!

Clean up the mess in this stinkin place - and the debris of three towering sets of lego-like "foundation myths" by which Hemke and his villains have "Silversteined" the metals space!

Free Teddy Butler! And set him loose... with a silver badge, as the new sheriff in this here town! \and then/ you will know the truth.

Since 2011... JPM and the Panda Pirates have worked hand in paw to sequester silver by a variety of stealthy methods... all the while running a false flag publicity campaign using their dupe media minions to shine the spotlight anywhere but pon themselves.

Huge amounts of this metal vital to the solar energy program which will be producing 60% or more of Chinas' energy needs by 2040 or before... now sit in vaults waiting for the day... when the west realizes that its' cupboards are bare of the national security 'commodity' it gave up on instructions of its' dual-citizen governors, and collapses like a house of cards in the face of a superior enemy whose (stolen) technologies and wealth under cut the capacity of a witless west to respond to the challenge of Eurasian hegemony.

So.... that's great news for my stak right?

Err... no. As I've stated repeatedly here and elsewhere...

silver will go from 'lying in the streets dirt cheap' to 'no bid.' As in not traded. With almost no notice... and little space in between. Unless you be lucky nuff to time that short n sweet window of opportunity with exactitude...

it's 'hello bagholder'.. all over agin!

https://storify.com/SuaveBel/cartel-vs-anti-cartel-peas-of-a-golden-pod

Butler/Goldwater 2020!

zorba THE GREEK's picture

Keep stacking.....silver will be the new gold

kahplunk's picture

Platinum the better silver super conductor