Stop Press! Silver is
cleared for take-off.

Silver has crashed through USD33.60, if we can hold above here, we are looking for a serious and vigorous run to USD40. There is no real resistance between USD34 and USD40. After this we are literally in unchartered territory – there is nothing in the charts above $42. On this basis we will soon be back to the 1980 high of USD40, Followed by the 2011 high of USD42.

What has happened? Dealer sentiment. The traders have turned to silver as the next big mover; their colleagues on the sales desks are pushing this to their big institutional clients. The sales teams had almost given up trying to talk up silver on supply and demand and gold ratios. They were bored with both fundamentals and technical. What they have now is a change of mindset. ​

At the recent LBMA annual conference for precious metals dealers, a survey of the delegates found that dealers believe that silver, followed by Platinum would be the biggest movers over the next year. They also, forecast a silver price of USD45/oz. Like points on a chart, these are self-fulfilling prophecies. If the majority of dealers for the Big guns, that is the Investment Banks and Hedge Funds are looking for USD 45, they will keep buying until they reach their target.

What happens then is anyone’s guess, but with momentum could just keep going. These same people last year expected gold to be the big mover and forecast a 10% move. It in fact achieved 30%.​

Added to the sharp increase in the spot price, the forwards and futures are starting to be squeezed. This will encourage any remaining short positions to close-out as it becomes more expensive to hold a short position. ​

The Big Battalions have turned to silver. And as Napoleon liked to quote: “God is on the side of the Big Battalions”. ​

This information is general in nature and does not constitute professional advice. Seek independent advice before making any investment decisions. Gold Bullion Australia is not liable for any loss resulting from reliance on this information.