Recently I have become very interested in precious metals, and have begun researching gold and silver bullion. I am trying my best to become educated about the price -vs- value, their use case and historic reliability, all of which fall under the fundamental analysis of bullion, and all of that research is very exciting.
However, even more than this, I am shocked by what the technical analysis (TA) of the silver bullion chart reveals. Check this out:
Disclaimer:
Before I go any further, I am a Technical Analyst noob. I am not a financial advisor.
Please understand I am writing this largely for myself, and because:
- I am excited by precious metals
- I am learning a lot and love to journal my education, and...
- I want people who read this to respond and give me feedback which hopefully helps me learn.
Silver: 40 Year Cup & Handle Formation
While researching the price of Silver I was immediately struck by the obvious "cup and handle" formation on the charts.
Knowing very little about chart analysis, I do know this patter is bullish, so I began more research on what this could mean long term.
Cup & Handle Explained:
What is 'Cup and Handle'?
"A cup and handle price pattern on bar charts resembles a cup and handle where the cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern typically has low trading volume, and may be as short as seven weeks or as long as 65 weeks."
- Read more: Cup and Handle https://www.investopedia.com/terms/c/cupandhandle.asp#ixzz5S2MF1HjU
Considerations:
Cons:
People often say that "Cup & Handle" patterns are a short term indicator, and the pattern is thought to not apply as a long term indicator. Investopedia says the pattern applies on 65 week charts or shorter, not longer. If so then the silver chart does not fit the pattern, but otherwise it does look the part.
Pros:
In my review of Silver on Tradingview.com I find a lot of short term bears with an overall long term bull sentiment, and I like that. My analysis points me back to two main considerations, which are adequate grounds for moving a portion of my portfolio into silver now.
Why I am long on silver:
- Silver bullion is a hedge against global economic collapse and hyperinflation, which I expect to occur within my life time.
- Additionally, I consider bullion undervalued compared to the bubble economies of 2018 such as real-estate, stocks, and even bonds, not to mention fiat paper currency. When those bubbles pop, money will flood toward real money: gold and silver.
- Silver has been in a multi-year bear market already, moving from $40 down to $14, and I love buying assets in the red.
Regardless of what the price is today, I am a firm believer, from what little I know, that silver bullion is a better investment than stocks, bonds, mutual funds or most other mediums of "savings".
Price is not the same thing as value.
So in conclusion, the silver chart looks like a multi decade long cup and handle, which would imply a boom upwards to new all-time highs of around $80USD/oz, and that is of course exciting. Admittedly that pattern may not apply, but regardless, I see three great reasons why silver could be an excellent investment today.
Questions or Comments?
On this topic more than any I'd really love to hear your comments. I am new to this asset class, but it seems to me a logical extension of my crypto-enthusiasm since it all hinges on my underlying distrust of fiat currency, modern banking, and the global crises I anticipate within my life time.
Do you own bullion? If so do you have any tips on how I can buy it cheaply? Are there excellent sites, which are safe and reliable which you personally use, if so which?
