Silver pricing 1 year on…


Page links:IntroLessonsSuccessChartsNew normal?Going forwardSilver vs fiat


Well, it’s been just over a year since the last post dealing with the ups and downs of the silver price.

That’s not to say I haven’t been keeping an eye on it, although for a large part of that time my portfolio did not contain any digital silver bullion and so without anything at stake, spot price watching fell off the radar a bit. Ooops..!

Lessons learned

That seems to be a pretty normal response – technically you’re in the market and looking for a buying opportunity, but complacency sets in since you’ve taken profits (hopefully!) and it’s very easy to misread the big picture and miss out on good trades.

Also, having sold out at a high can lead to a reluctance to reinvest if the price stays up because it’s moved to a new level.

In retrospect that’s what happened to me – it’s good to be aware of these psychological barriers we all have – still that’s just the first step in overcoming them and I have to say that I didn’t, really… the next hurdle in the sequence is not to jump in just because it looks like you’re missing out… discipline, patience and perseverance are all so much easier to talk about than actually do!

A small success

Anyway, it’s not all bad news and disappointment as, let’s say more by good luck than management the portfolio received a slight bullion silver boost in early December and a full trade was eventually completed – meaning dot amount of silver bought, sold and bought back again for profit (small…,very).

Charts

Of course the next conundrum is now in focus with the recent quite dramatic fall in the spot price from USD 25-26 down to USD 21-22.

I’m useless without a chart and interestingly, the current 1 year chart is practically the inverse of that from last April’s post, so instead of seeing a strong possibility of extended higher prices, we’ve come off the highs and are faced with the apparent likelihood of ongoing lower prices with more drops in the offing – below USD 20 is not out of the question.

kitco price chart 1 year silver 2022
Silver – May 2021-2022 – chart courtesy of kitco.com

New normal?

It appears that, so far as silver market makers are concerned, the situation is no longer critical like it was back in 2020.

We’re sitting very roughly halfway between the extremes – the floor of around March 2020 and the ceiling of February 2021 – nicely positioned for a significant move in either direction, really.

In fact it does look like the level at the moment is not very far off what you would expect following the notion of Fibonacci retracement levels.

As usual everything appears to make sense and look good in hindsight, the rear view being of course the only one presented via a chart but, importantly, in this game perception very much influences reality and technical analysis using Eliot Wave Theory and Fibonnaci retracement levels are not without merit, if only by virtue of the fact that so many people use them as guides for making their investment decisions.

Going forward

My feeling is that things will drift toward USD 23 and tend to stabilise before the next signicant market event, whatever that might be – there’s certainly plenty of reasonably forseeable options ranging from the consequences of war or peace to the inevitable and inexorable effects of centralised financial policy.

Precious metal vs fiat currency

What happens to the price then is pretty much anyone’s guess – still, for me bullion silver is mostly about having some kind of worthwhile asset, one that will be repriced in however many dollars it takes to reflect its value so as not to lose out if the long term trend of declining buying power for fiat not only continues but also accelerates ( for lots of detail on this view, see articles by Alasdair Macleod or Jim Rickards ).

My bias is that I don’t see silver going to zero – it might fall off a bit in real terms, yet some sort of value will be retained which is in direct contrast to state backed currency, digital or physical tokens (paper and base metal coins) included.

You must first preserve your wealth before you can prosper, which is not easy in today’s climate – that earlier mentioned trade I worked so hard to complete…it didn’t keep up with even the official rate of inflation, let alone the real figure.

Better than having kept it in the bank, though!


Many thanks for reading!

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Page links: – IntroLessonsSuccessChartsNew normal?Going forwardSilver vs fiat


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