Silver Price: People will have FOMO in the next bull market

June 5, 2024

Silver Price: People will have FOMO in the next bull market

MrBigMoney How To, How To Invest In The Metals Market chart analysis, chart reading, chart reading strategy, economy, finance news, financial news, gold, gold charts, gold price forecast, gold price today, investing, investing news, kevin wadsworth, kevin wadsworth northstar charts, patrick karim, patrick karim silver, silver, silver chart, silver charts, silver price, silver price analysis, silver price breakout, silver price forecast, stock market, stock trading, technical analysis, technical analysis of stocks, trading 21 Comments

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[Music] we’re taking our monthly look at the charts uh but this month we have something different I’m not being joined by a technical analysis expert I’m being joined by two technical analysts uh that is Patrick kareim and Kevin Wadsworth of Northstar bad charts gentlemen welcome to the channel thanks Dave it’s always good to be here thanks hi Dave um listen we’re going to dive straight in um obviously gold and silver at the moment we’ve been on a decent run now since the end of February beginning of March and Kevin last time you were on this channel you were talking about quarterly closes particularly in silver and you had drawn a line at the $28 level and said we shouldn’t even bother looking at Silver till it breaks that $28 level we’ breached through that now significantly we’ve been up to 3250 nearly 33 at one stage what are your thoughts on Silver now okay um well Silver’s done extremely well as you say just over the last few weeks and it has broken that 28 barrier in fact there’s a zone of resistance between 28 and 30 and I can go right ahead and share a silver chart with you I just make sure I’ve got the right chart because I’ve got a few of them here but yeah this is the silver chart and you can see the uh 45e cup and handle pattern that has been forming on the silver chart uh really quite a an impressive cop and handle you’re never going to see one bigger than that I don’t think and uh what we’ve been focusing on over the last few years of course is is this uh handle portion of it which is actually a cup in its own right but these chart patterns form on all sorts of time frames from hourly charts through to multi- deade charts and uh so we’ve got this resistance Zone uh around the 28 level and uh you can see this um multiple levels of technical resistance from the threeyear moving average the 12- month moving average the choku cloud the what we call here the wake up line which is a resistance line the price of silver has to pass through to to wake up and the clues in the in the title there really so the price of silver has woken up and by breaking through that 28 level after an initial hesitation we’ve seen a very big nice uh green monthly candle here if we close the month um anywhere near the prices where sort of price level we are now then um I think there’s a a little bit further that silver can go uh when you start looking at some of the technical indicators we are starting to get a little bit stretched on particularly some of the shorter time frames so um if silver is going to get up into this initial Target area it’s probably going to do it in the next uh sort of three or four weeks I would imagine and it’s uh silver being quite a a volatile spiky metal if you like uh it does tend to move in in big jumps so it wouldn’t surprise me at all if we pushed into the mid-30s and possibly closer to this initial Target area but by that stage we’ll be getting pretty stretched on all sorts of technical indicators and a lot of metrics will be getting stretched so I would imagine that a significant pullback and we may even come all the way back down uh to the um to to retest that sort of breakout breakout area around 28 so uh big moves up are often followed by consolidations and significant moves to the downside with silver so I don’t want to spoil the party for anybody but that’s that’s quite likely to happen but of course all of this when we look at it in the in the big picture it’s all building towards something much much bigger and uh at what point this entire pattern breaks to the upside um we will have to wait and see on that but a lot of it I think has to do with broader Market um considerations and what’s going on in particular with the stock market as well at the moment so stock market May well hold a key to where precious metals are going over the next let’s say six to 12 months Patrick do you do you agree with your colleague on this and the other question really is um do you see the move more akin to what happened in the early 90s or something that’s more akin to what’s happened in the 70s well look the 70s it’s a it’s it’s a while back it is a good data point a lot of people they they look at the 70s to see to find analog moves to to tell like okay moved 10x whatever it moved in 70s they apply it today but then on on the on the other side we’re closer to the 2000s right so if ever something like macro changed we’re the environment is closer to what we have in the 2000s but that’s what ta is about you need all these varying data points get as much history as you can and then after that you have like a ballpark of targets right if it’s a 2,000 moves it won’t be as exposed the 70s it’s going to be a longer move and the pretty high but in the 70s it was shorter and higher and then it gives you a ballpark range of where you should expect you know your your target range but that’s just like these big endgame targets and everybody often they look at these endgame targets but we’re not going to stare there long it’s going to be super hard to time people the fomo is going to be crazy because it’s guaranteed that when we’re at these alltime Peaks people will think they’ll be as bullish or than they ever were during the whole bll cycle and then they’ll be buying head over fist while that’ll be the end right but if I if I go back to what Kevin said it depends on the markets I think an interesting chart we should look at is the silver performance versus the market the SPX right and go look I have lines perfect but I’ll explain this what’s happening right now is this is Silver versus SPX since let’s go back to the 70s so here in the 60s um was going down down down this is the bull the the the bull era for us equities and as The Bull era for us equities was unwinding in the late 60s silver was able to break out out of these consolidation patterns explode upwards outperforming so no matter what the price was of silver back in 1973 right here it’s exploding versus US Equity so if I’m forcing you to hold either silver or uh the stocks you’re better to hold silver no matter what direction they’re going right that’s what a racial charts giving you as Clues but we know that if I would have overlaid the silver chart on top of this it’s it’s it’s the silver price moving this right us Equity is buling sideways or down or even going up but silver is drastically outperforming it so you want to hold silver here this severe underperformance by silver during the entire 1980s 90s all the way to 2000 puts a bottom and look they broke out silver broke out on the monthly chart could make a case in 2004 maybe but then a more important breakout in 2005 so silver price was already much higher than was at the lows you know of 2000 but it was was still not a full-fledged bull era a bull era I’m not saying like a bull run a bull era in precious metals or in silver you need you need to outperform SPX because I’ll always come back to you silver could go up to $2,000 but if it’s not outperforming SPX what’s the use like you know what I know I know stackers they’re they’re happy they’re solver price going up but if you’re not outperforming SPX what’s the use so you got to be outperforming SPX and like the silver minor they track this gold minor so a lot of good things happen when SPX is able um when silver is able to outform SPX and I’ll remove just this thing here here is where we are today the the the severe drop that momentum has vanished we’ve been going sideways and this line here is going to be less and less steep as time moves on this breakout line right and that Rao is basically at about about 1/10th of 1/10th of what it was in the 70s and about you know what 1/5th of what it was in the you know in the in the 2008 2009 era so there’s a a significant break on out there’s a lot of potential um move to the upside yeah wherever this look this Arrow don’t get influenced because I could draw a big one here and but the bigger and arrows drawn the least probable that scenario is because you there’s going to be a lot of room like you know hurdles stuff like that so before what I could tell you is once you’ve closed above this line here on the monthly chart you’ll be above the ichimoku CL you’ll be above this high volume node you’ll be above the you’ll be above inclining 12 month and threeyear moving averages show me a bull a bull a bull pattern a bullish pattern on the monthly chart which is below a 12 month moving average or below a three-year moving average there there aren’t any and if there’s one you shouldn’t trust it because you need that objective unbiased mathematical three-year moving average climbing upwards that’s when look at that it’s bouncing perfectly on the three-year moving average during the whole run so whatever happens here here silver $32 $35 no matter what the price of silver is when we cross as black line is it’s going to go up much higher once we’re above it and faster and in a safer manner so nothing I know people are feeling formal we’re above that that 28 level we’re going to start maybe getting quarterly closes above 28 we’re going to get maybe a monthly close above 28 uh yeah we’re practically guaranteed to get it now unless the disaster happens today so it’s very bullish on the long term but it’s going to get even more bullish once you’re above this this key resistance line the it’s just so critical so there’s no need to formal guys at all because the true bu era is still hasn’t even get got enacted yet and it’s something me and Kevin were like we try to what’s the word there conciliate in our heads like how come gold at alltime Highs but it still hasn’t broken out versus SPX What’s Happening Here cu it’s slightly different now than what happened in the 2000s or in the 70s right so we’re the the pressure medals are Shoring strength but that’s just just the beginning once the markets really roll over and they have to print money to save the US equities that’s when silver and gold really really do well now when we look at those ratio charts you can break them down and that uh silver SP SPX ratio goes higher uh based on a number of different scenarios either silver goes up and [Music] as that market breadth continues to weaken uh on the assumption that it does the risk increases and I think as we go through the next few weeks and the next few months if the stock market does manage to hold up uh and continue to uh to either melt up or tread water the technical charts are going to start giving us some very good early Clues as to as to whether this is likely to end in end in tears and it’s of course part of the the sort of important part of a an equation for precious metals because if you go back to the 1970s and you go back to the early 2000s part of the process that led to the big precious metals bll eras were the breakdowns for for the stock market if you look at the SPX in the 1970s the SPX in the early 2000s you’re talking about drops of 50% or or more uh in nominal terms for for the S&P now that can happen very rapidly in dramatically in a scary fashion or it can happen in a sort of um in a more gradual stairstep fashion now the extent to which precious metals are affected by such a scenario the stock market dropping depends on the nature of the event that is causing it and whether we have some kind of liquidity crisis banking crisis Financial Cris whatever the event is that uh sort of goes hand inand with the stock market tumbling to that extent will determine just how much precious metals uh take a hit or whether they take a hit at all they don’t have to by the way um there’s nothing to say that precious metals have to take a large drop but with gold at all-time highs and silver perhaps spiking to quite high levels if that coincides with stock markets rolling over then you’d have to say I think that the risk for precious metals for at least a a sizable pullback is is there now in in percentage terms the ratio charts are suggesting that it’s likely that before very long the strength is going to begin to show in Precious Metals Visa the stock markets and that ratio is where the clue is going to be because if everything is falling but the ratio is holding firm or moving to the upside then we’re going to start getting some real confidence for what’s about to come uh if the gspx ratio starts to move above the 0.5 level in particular historically important level um then our confidence level is going to increase that this is indeed a repetition of the 1970s and the early 2000s in those terms I.E kind of like the button being hand from the stock market to precious metals and the stock market saying right I’ve done as much as I can I’m out of breath guys you take the bat on and you run with it and and that’s where the focus of um investment you know will be for for years to come so that’s you know and that’s what the ratio charts are that’s what they tell us they tell us where the the capital flows are and where the capital flows are going so risk is high for the stock markets and also particularly if you look at bond yields and you look at a 10year yield I’ll quickly throw up a 10year yield chart uh just to kind of put this into context for you um let me make sure I’m showing the right computer screen here here we go so the 10year yield chart is looking something like this so This Is Us 10year yields going to get rid of the tickers on the right hand side of the screen there ticking up space um so this is the 10-year yield chart and what we saw was 40 plus years of a declining 10year yield now if you look across the left hand side of the screen you can see something labeled the pain line and it’s labeled that because it’s a resistance line that when crossed above started to create a great deal of pain in the economy with Rising rates Rising yields Rising inflation now back then of course GDP was dropping quite drastically but we’ve got a very different situation now where GDP over the last 40 years has been in uh sorry debt to GDP I should say has been increasing so debt to GDP was dropping during this period here back in the 60s and70s but debt to GDP has now been rising steadily for the last 40 years at the same time we’ve broken out above the pain line again that resistance line resistance line was there for a reason it needed to be there to contain the the um the on yields in terms of debt sustainability so as as debt to GDP was Rising the yield the interest rate on that debt was required to drop to keep it manageable we’ broken out like we did in the 1970s above that pain line but with Rising debt to GDP the mathematical problem is somewhat more acute such that for example a 5% rate is probably having similar um effects as perhaps seven or 8% might have had back in the in the 1970s so I mean I’m not an economist I’m a mathematician statistician you know meteorologist I’m technical chart Trader but what I do know is that this is not particularly sustainable from a mathematical point of view so you know we we do have issues here with a 10-year yield being up at these sorts of levels and of course you know all of this feeds into inflation stagflation um Rising prices rise in PPI um increase in money supply which is by the way breaking out at the moment as well M2 money supply is on the verge of breaking out so we’re got a whole what I’m saying is we got a whole load of economic problems here in terms of the mathematics of debt sustainability and I think that’s what’s behind Gold’s move gold is moving silver is moving because it knows that this mathematical problem of high debt GDP coupled with Rising rates uh Rising inflation is is is is a serious problem whether whether there’s actual the ability to sustain at those rate levels or not if they do what you’re saying is there’s going to be some serious consequences very serious con consquences yes and and don’t forget of course now this is a lot of people don’t stop and think about this but we’re sort of brainwashed into think thinking that GDP is somehow um a measure of a a functioning economy you know good functioning economy that GDP is somehow G to be good because um you’ve got a great economy well it’s actually not GDP is actually money supply multiplied by money velocity if you if you lay that graph money supply times money velocity put that on top of the GDP graph they’re one and the same thing they’re exactly the same so if you want to increase GDP you either have to increase money supply or money velocity or both it’s as simple as that so what I’m saying is if if governments want to increase GDP if the velocity of money isn’t sufficiently increasing there’s only one solution and that’s to print money increase money supply and that’s how you increase GDP it’s not it’s not to do with somehow the the economy is doing great and all the policies are the correct policies and somehow jobs are being magicked out of nowhere it’s a whole load of money being pumped into uh the economy printed effectively zeros being added to a to everything and and that’s this is what gold um reacts to Gold tracks lots of purchasing power of course so you know if you’re going to be printing money increasing money supply then it’s only natural that gold will uh will will track that and I think that’s what gold is kind of doing at the moment yeah Patrick maybe you just uh focus in on a gold chart we’ve touched on we spoken my gold we haven’t seen a gold chart and then I’d be interesting if you’re going to segue into the gold versus S&P and see if we’re seeing what we’re seeing in silver replicated on the gold chart I could certainly do that so let’s let’s check it out gold SPX and we’ll you’ll see Kevin’s or the magical do five half when gold is worth half of SPX I could put a line here going all the way back to the 1970s do five here you go here’s the 70s the bottoming of gold versus SPX and then once gold breaks out versus SPX that was it above the inclining one year threee moving average the cloud above that resistance that dot five resistance and that was the bull run then the Bull Run deflates here’s a parabolic top in US Stocks making the gold silver the gold to SPX ratio Plus and then after that once it climbs up above that five that there’s the bull run but it was so severe that we kind of had a like a vshape so you could have probably um found other breakout lines that could get you in earlier but the bull run the idea is the Bull Run is active as you’re above the inclining one year and threeyear and it dies once you break a topping pattern below a death cross one year three moving average then you’re in but look where we are now it’s like there’s none there’s no evidence yet that we’re in in a gold bull era precious there’s a gold Bull Run there’s a run on its own nominal price chart but you’re not outperforming SPX so we can’t lie to ourselves we’re still in a downtrend versus SPX and now we’re we could say down and then sideways and now the angle is important because we’re less steep so before we can go up you have to stop that down momentum you need flat horizontal momentum neutral plane and then you have a chance of going up so the party starts above dot five it just and there’s a probably a resistance line you know you can always zoom in and get these more angled resistance lines along the way but this is going to be a fight and this the victory is above here somewhere there that’s that’s when we goodness that’s when those $5,000 $8,000 gold targets they happen or they have a higher likelihood of happening once you’re above above this line because just bear in mind the gold could be3 or $4,000 before we even cross that line that’s right or you could get the correction you could get the let’s say we go up to 2,800 then you get that correction to 2400 or let’s say we correct from here back to 2100 all that stuff could happen here so and this ratio will just go sideways no matter what the price of gold is depending also what’s happening to the SPX but gold and silver more often than not they go up when the the US stocks do go up it’s not they’re not anti they gold and silver love going up with us stocks but only after the US Stocks has severely rolled over the recovery I call them the recovery rallies so in bare in US Stocks bare markets when the US Stocks you know they they they try to go back to previous highs that’s when gold and silver go Bonkers they price in all that destruction of purchasing power required to save those US stocks then that’s what gold silver go Bonkers and gold and silver they usually top once the US stocks are able to break out above the their topping process that they did before the bare Market starts that’s when gold and silver top gold and silver do not top when us equities bottom and start moving up they love that they bottom and they go up with us stocks so people always looking for the demise of us equities no if that if the US Stocks keep going down and down that’s going to put downwards pressure on on the uh on gold and silver right you want the precious SPX to take a hard hit go into a secular bare market and every time it recovers the US Stocks that’s when gold and silver really go up so if anybody thinks that they’ missed the uh the bull market in Gold wait until we actually see these ratios breaking up to the outside and that’s where you’re going to see the real fun happening that’s right you can tell the miners the miners aren’t the there’s some miners doing great but the the the the mining indices they’re not they track gold versus SPX or sometimes gold the better ones track gold versus in inflation and until that ratio goes up yeah there’s the precious metals complex is not in a bull era it’s just not there’s no no need to have any fomo at all at the moment because as those charts indicated there we just have not even really properly started yet so it’s great that Silver’s gone above 28 it’s great that gold has turned 2,000 from resistance into support and that’s very important by the way the 2000 in gold was very very very important resistance it’s now very critical support So any back tests at that 200000 area very likely to hold a support now and that’s that’s a critical change and it’s surprising a lot of you know that kind of happened quietly you know it’s it’s kind of ushered in a new era but a lot of people don’t really uh appreciate that that that change so there’s no no need for any fear of missing out at this moment in time when those um ratios start breaking out that’s probably when you want to start moving from stocks into precious metals in more committed fashion yeah yeah Patrick Kevin thanks for joining us in the channel today thanks Dave you cheers Dave

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