Silver Set to Soar: Why $100 an Ounce Could Be Just the Beginning!
Last month, I discussed the potential for silver to break out of a well-defined symmetrical triangle pattern, and as of Wednesday, July 2nd, the price has officially done so. Following this breakout, I am now setting a short-term price target of $39. While a 5.5% price increase may not thrill the broader investor community, it could present a profitable swing trade for option traders. Additionally, I have a long-term price target for silver that investors may find worth considering.
The longer I look at the long-term charts on silver the more bullish I get.
In 1948 Robert Edwards and John Magee published Technical Analysis of Stock Trends, a must-read for anyone interested in learning about chart analysis. This book was required reading when I pursued the Chartered Market Technician (CMT) program though the Market Technicians Association years ago. In their book, Edwards and Magee state that approximately 75% of symmetrical triangles are continuation patterns. They also note that the price may sometimes pull back to the breakout point before advancing in the continuation pattern. Based on my experience, I believe this is the more likely outcome for Silver.
The Cup & Handle is another popular and reliable price pattern. On September 23rd, 2024, ZeroHedge published an article I wrote about the Cup & Handle breakout in Gold, in which I set a price target of $3,000 per ounce. As shown in the chart below, Gold not only reached that level after the breakout but also gained an additional 10% beyond my target price.
Now that the Gold/Silver Ratio is 90:1 I believe it’s time for Silver to make its move higher…much higher.
Below is a chart that goes back to 1970 and the Cup & Handle you see here has been forming for the last 45 years. The pattern begins with the first pullback from the $50 high in 1980, which was when the Hunt Brothers triggered the big short squeeze on Comex.
It’s not just technical signals exciting silver enthusiasts; The fundamentals tell an even bigger story. If you’ve followed silver over the past few years, you’re likely aware of the surging industrial demand for this precious metal. Solar energy, electric vehicles (EVs), and electronics heavily rely on silver for its unmatched electrical conductivity. However, the critical issue is that supply is dwindling.
According to Keith Neumeyer, CEO of First Majestic Silver, global silver mining produces around 800-825 million ounces each year, while consumption ranges between 1.2 to 1.4 billion ounces, creating a gap of nearly 500 million ounces. This imbalance exerts upward pressure on prices, especially as mining output remains constrained due to underinvestment. It makes me wonder what Elon Musk is thinking. Will he, or has he quietly bought up some mines we don’t know about?
In my view, silver is currently the best investment opportunity available, and I plan to keep accumulating as much physical silver as possible, along with mining stocks such as First Majestic ($AG), Pan American Silver ($PAAS), and the iShares Silver Trust ($SLV). As an analyst, not a financial advisor, I cannot advise you on how to manage your money, but I can share what I am doing and will continue to do for the foreseeable future.
Stand tuned to my X Page and I will be sure to give you technical updates along the way. You can follow my silver trades, and analysis, using #AJSLVTrades.
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