Silver Has Bottomed

53
Wed, Feb 4, 2015 - 12:20pm

Of course, fundamentals such as cost of production are important. However, with the help of some charts, I think we can clearly show that silver put in a final bottom back in November and December. With the nearly four year, brutally-enforced bear market behind us, what should we expect in 2015 and beyond?

There will be no hat-eating promises but I'm certainly not going to shy away from what I think is plainly obvious after a sober review of the charts. Namely, that silver has bottomed. Finally. Yes, it has been a long four years but trends don't continue forever and prices aren't going to zero. Therefore, it was always logical to assume that silver would eventually bottom and resume its bull market. With the blowout, capitulative lows of late last year, I firmly believe that we have seen this final bottom.

Let's start with the 5-year chart so that you can see the full picture. After breaking price on May 1, 2011 and then slamming the coffin shut with five CME margin hikes in just nine days, The Silver Banks were able to break the back of the last bull market. With a subsequent raid in September of 2011, price was driven all the way down to $26. That level then held as a floor for nearly 19 months. It wasn't until the coordinated massacre of April 12-15, 2013 that $26 was taken out and price fell to $18.20. The area between $18.20 and $18.60 then held as a floor until September of last year, when the final capitulative selloff began.

So, how can we conclude that this final blowout below $18.20 was The Bottom? The answer is in the charts below.

Let's start with another look at the five year chart above. Let's remove the red floor lines and add a blue line connecting the April 2011 highs with the late 2012 and early 2014 recovery highs. Now remember what we always say about broken long-term down trendlines...Price almost always comes back down and "rides the line" as support before finally moving higher in the new UP trend. Well, what do you see here?

Next, let's look a little closer. Here's a two-year, weekly chart. Note the resistance area that is the previous floor between $18.20 and $18.60. When price was finally broken through that area in early September of last year, it is important to note that it took eight weeks for it to find the bottom in the area between $15.00 and $15.50. Next, take note that silver then took eight more weeks to establish and test the bottom between $15.00 and $15.50. And finally, notice that we are now in week five of the recovery, back UP toward and eventually through the prior resistance of $18.20-$18.60. This doesn't mean that silver will wait until the last week of this month and March expirations to finally and decisively move back through the previous floor but don't be surprised if it does as that would be the final, eight week period.

OK, now let's dial it in even closer. A true, final capitulative event should come on heavy volume. Why? That's the essence of capitulation, isn't it? The throwing up of hands and surrender. Just get me out. I can't take it anymore. After that event, the low that was found should be tested at least once to see if further selling materializes. For a sturdy, final bottom, you'd like to see high volume on the capitulation but dramatically less volume on the subsequent test. Hmmm. What do you see on the chart below?

An additional review of the chart above also reveals another encouraging signal. This wasn't just a double bottom around $15.50, this was a process. In the middle, on Monday, December 1, there was a massive blowout that actually began on the evening of Sunday, November 30. It was the highest volume of any day. It culminated and concluded the massive selling and volatility of November. And, most importantly, the resulting chart formation is perhaps the most impressive outside reversal, engulfing candle you're ever going to see:

Lastly, one of the most tried and trusted technical chart patterns often comes in at tops and bottoms. When something has exhausted its buying momentum near a price high, you'll often find in hindsight what we call a "head-and-shoulder top". Generically, it might look something like this:

At a low, when something has exhausted it selling momentum, you'll often find a "reverse head-and shoulder bottom". Basically, it looks like you've taken the chart above and flipped it over, sort of like standing it on its head. Now, take a look at the chart below and tell me what you see:

Once again notice the amazing symmetry. After breaking the $18.20-$18.60 floor, price fell to $16.65 and then recovered to near $17.70. It then fell to the final capitulation low between $15.00 and $15.50. Now in its recovery, it has found resistance again at $17.70 and $18.20 while finding support at $16.65. Remarkable!

In the end, I know you're more interested in the future and not the past so, the question becomes, now that silver has bottomed, how far and how quickly might price recover?

Once silver finally paints a weekly close back above the old $18.20-$18.60 floor, it will rapidly move toward the blue line on this chart. As it stands today, that's an area right around $20. You can also expect quite a bit of "psychological, round number resistance" there, too.

But, obviously, the recovery and new bull market isn't going to be limited to just 30% and back up to $20. No way. Once $20 is bested, the next major test will be $22, which is the low that was established in the wee hours of April 16, 2013:

And once price finally recovers through $22, the goal becomes $26 and exceeding the floor/lows from the selloff of September 2011:

Of course, none of this is going to be easy and it is quite unlikely that price ramps back up as quickly as most of us would like. Just a move back to $22 by year end would constitute a 40% move for 2015. That's pretty dramatic and it's only to $22 so don't go expecting too much, too fast. We discussed symmetry earlier and, if you use your imagination, it's easy to see a couple more long-term reverse head-and shoulder formations building on the weekly chart above. For example, the move from $22 to $26 would represent another 18% gain and, with chart symmetry, that could take all of 2016 to accomplish. The next stage from $26 to $36 would be another 40% and that could conceivably take us from 2016 to early 2018. That's three years from now but, realistically, expecting it to take three years for something to double in price is actually pretty aggressive.

That said, it's also possible for silver to move UP very quickly as The Banks are squeezed and forced to rapidly cover. We saw this in 2010 and 2011 and we could very well see it again. As you know, the structure of the latest Commitment of Traders report is similar to that from October of 2013 when price was $23 and what happened next? Price surged from there to nearly $50 in just seven months.

But, whatever. The point of this post is not to get you all fired up and salivating at the prospect of another huge rally in silver. Instead, the purpose of this is to show you why I believe without doubt that silver finally bottomed late last year. It is not going to $8 and it is not going to $12, either. Instead, price will now begin a new UP trend that will unfold over the years ahead, ultimately taking silver back to the 2011 highs and beyond. Prepare accordingly.

TF

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turd [at] tfmetalsreport [dot] com ()

  53 Comments

Owtovit · Feb 4, 2015 - 12:22pm

Uno

1

ArtL · Feb 4, 2015 - 12:23pm

2

dos

Marchas45 · Feb 4, 2015 - 12:23pm

First Again??

Shoot!!! #3rd

H8Fiat · Feb 4, 2015 - 12:31pm

I'll believe it when I see it

Although I picked up some slight OTM calls on Ag, I won't believe this is bottom till we're way up. I just don't believe that any of the data provided is accurate. The EE paints what ever picture they want because they know that laws don't apply to them. This isn't a market, its a show. When it breaks, and it will sooner or later, they will settle for cash at lowest possible price.

We have the best regulators money can buy.

H8

Dr. P. Metals · Feb 4, 2015 - 12:44pm

@Marchas45

pretty funny, keep trying, you're "firsts" are moving down the list, not up LOL. Just teasing a bit. in case CPE or you read this as serious. LOL

Barfly · Feb 4, 2015 - 12:46pm

The Cartel has heard you

Stand by for a raid in 5, 4, 3,......

Kansascrude · Feb 4, 2015 - 1:01pm

Hope your right Turd

Been adding to the phys stack all along since 2006 and now have a baby hoard. Meanwhile the hourly coordinated price smash by TPTB continues like clockwork. Today in the Gold market its pretty much at the 15 minutes past the hour on the hour lasting till about half past. With an extra raid or two thrown in when things were hopping earlier this morning. It really is a well orchestrated effort. Hopefully the Stackers can defeat them. To bad all the PAPER leg hounds just looking for quick profits continue to feed the TBTF Bear's efforts. Seriously how many of you have made money trading the rigged derivatives on any kind of a regular basis? Yep its your $$ so its your Call the odds are horribly Stacked against you!

https://www.cmegroup.com/trading/metals/precious/gold.html

lelford · Feb 4, 2015 - 1:44pm

nagging fear

"After breaking price on May 1, 2011 and then slamming the coffin shut with five CME margin hikes in just nine days, The Silver Banks were able to break the back of the last bull market." _ Turd

What's to stop them from doing this at any time of their choosing? Built my small stack on the way up, added to it on the way down and will continue to do so, hopefully several times on the way to new highs. But there remains the nagging fear that they are and will always be in control.

Marchas45 · Feb 4, 2015 - 1:49pm

@Dr P Metals

Yep The Older I Get The Slower I Get. LMAO

Orange · Feb 4, 2015 - 1:55pm

Turd's little red circle

Has been on my mind all morning, so I set my JNUG at $33.20 before going shopping at 1pm. Just got back to see it sold for a $2 profit since I bought yesterday. I wanted more, as we tend to always do, however that little red circle kept me focused.

Thanks Turd.

Iceberg Slim · Feb 4, 2015 - 1:56pm
Marchas45 · Feb 4, 2015 - 2:06pm

Turd

You should make this thread Public as it's very well done and very Positive For The Metals. Keep Stacking

indiana rod · Feb 4, 2015 - 2:19pm

Bottom Is In

I'm convinced the 12/1/14 outside reversal day was the bottom. Silver had a low of $14.155, went up $2.655 and closed at $16.692. O. I. fell 17%.

The short O. I. compares to Oct.,2010. The price started to get away from them, threatening ruin to the shorts, hence the 'Sunday Night Massacre.'

Could they do it again? Maybe, but I like the idea of the more than double price in seven months.

The banks have never been over run but there's a first time for every thing. Why did the CME install the daily limits on silver unless they feared a break out?

perdman · Feb 4, 2015 - 2:20pm
CPE · Feb 4, 2015 - 2:21pm

Fellen or Kuroda

When's the perp walk?!?

Steve Silver · Feb 4, 2015 - 2:26pm

GOFO and misc

If you follow the link

https://www.barchart.com/commodityfutures/Gold_Futures/GC?search=GC*

you will see cash and futures contracts trading. If you watch over time cash is trading higher than the February contract and usually over the March contract. That is negative GOFO. CPE suggested GOFO is probably negative. Looks like he's right.

Fridays strong rejection of Thursdays gold takedown suggests that a short term bottom is in place. Meanwhile the cartel is pushing back against every rally. Sometimes they do that when they know something gold bullish is coming and they want to minimize its effect.

The labor report is BS but with the loss of oil jobs as well as manufacturers being hurt by the strong dollar the jobs report may be weaker than expected. A weak labor report would also weaken the dollar so it may actually be politically more palatable than usual to help US companies compete. Weak labor reports have been very gold bullish over the last few months.

Perhaps you may want to get your buying in Thursday.

make sure to have plenty of popcorn the PM show is just getting started.

perdman · Feb 4, 2015 - 2:29pm

Maybe. I don't know.

My only obligation is to provide quality content for everyone here in The Vault. You all are my primary concern.

Why let others know by letting them see this post? Anyway...I'll think about it.

Steve Silver · Feb 4, 2015 - 2:30pm

clarity

Not sure you can deduce negative GOFO from that but you can plainly see and rightly call it backwardation.

· Feb 4, 2015 - 2:39pm

public

I agree--the reason would be to get more subscribers. You are providing tradable forecasts and others need to know that to help them make a decision to pony up and join.

Just a suggestion.

infometron · Feb 4, 2015 - 2:50pm

Re: public

From a business perspective, if one felt that anything of importance in the vault will be rendered public, that might actually deter more subscribers than Craig's great headline teasers would otherwise attract.

From a silver investor's perspective, getting word out with sound reasoning behind it would clearly be a good thang.

Tough call, but I'm totally with Craig either way he chooses to go with this.

· Feb 4, 2015 - 2:52pm

NOT greasy kids stuff

Holy Moly! Talk about a widowmaker. A rally to $54 resistance and then a drop back to $48 support, all within 3 days. YIKES!

CPE · Feb 4, 2015 - 2:57pm

Turd

I think your bottom calling on Silver will be as prescient as your call on the reasons for oil's fall: https://www.tfmetalsreport.com/comment/399916#comment-399916

Great work, and public/private? What infometron said.

alivecatbounce · Feb 4, 2015 - 2:57pm

Silver has NOT bottomed - CHART

 I will make the case that we have not bottomed , not trying to be an ass and oppose Craig , but because we all know the markets are completely manipulated and run by computers . By the way , I will leave all the deflation bias , a probable deflationary event style 2008 or any other fundamental factors aside that point to the conclusion that we might continue moving lower . 

We look at the chart on kitco where there are several days of overlay and see identical patterns with spikes to the upside and downside happening @ identical times with the same shape etc. and we laugh , draw hats , penises and have fun with it. Some people make up stories WHY it happened , others like in Turdville KNOW why this shit happens all the time.

 I found one pattern that shows that we MIGHT have not bottomed but instead are bound for another LONG downturn grinding slowly for another bottom in the summer . All this action driven solely by computer algorithms , zero fundamentals , absolutely ZERO reflection of the real world whatsoever ! The monkeys might be pretty much not alive but instead coldly calculating machines programmed to keep the system going. We live in the ultimate illusion right now and this realization drives me NUTS . I mean sometimes I feel like I am going to lose my mind or that I have already lost it , yesterday had this really gloomy feeling of loneliness and the only place I can find like-minded people is on the internet as everybody thinks I have lost it completely warning them of the credit collapse and that we are nearing the end of this cycle . Everybody thinks I am making those things up . OR maybe I am ? Not sure of anything ,anymore, maybe they will be able to offset the credit collapse and get from fall to spring skipping the winter ?

 Anyway , got a bit distracted and emotional ... back to the point - Yesterday we had an argument in one of the past threads and several of us did notice that the rally we now had since Nov to Jan is IDENTICAL in pattern to the one from last years Jan-March rally . Not only the shape is the same with 3 lows with the one in the middle taking out the previous one but also the timing of the lows , when it turns up and then when it tops !!! Raises a few questions to say the least:

And here's the link for better view :

https://www.mql5.com/en/charts/2979869/silver-d1-varchev-finance-ltd

​I mean , should I explain any further why I am a bit doubtful of a bullmarket and that the bottom is in ? Who said they are losing control ? I don't think so . You know , if the machines lose control we will most probably get aware of this in the next few minutes when all comes crashing down ... no questions asked , no theories , we will see it happening with our own eyes . And it will be FAST and violent . Flash-crash of the whole system . Kaput .

Personally , I am taking a break of all this , will put an alert line @ 18.70 and near the previous low to alert me when to make another order for physical . 18.70 again is some sort of a magic number , if you play a bit with the chart you will soon know why .

Re-reading this post and trying to correct some of my numerous grammar and spelling mistakes makes me realize why the people in the family and friends think I am fucking nuts . Well ... 

CPE · Feb 4, 2015 - 3:00pm

@Alivecatbounce

Today $1 Billion of paper gold was dumped in 3 minutes. The price fell by $4, not $40, $4!

Don't fear the banksters, keep on stacking.

bobbyc · Feb 4, 2015 - 3:03pm

Public

I agree with Dr Jerome. I became a new member last month because of the public posts. And with the great info I am now getting it helped me to pull the trigger last Friday.

Bobbyc

Marchas45 · Feb 4, 2015 - 3:09pm

@alivecatbounce

Nice chart there my friend now I'm having second thoughts. Lol Thanks Again. Lol Keep Stacking

brokerk22 · Feb 4, 2015 - 3:18pm

I hear ya

Alivecatbounce. No one knows how this will play out. They could just as easily switch sides and go long and let this thing go. They could just as easily pound us into submission until physical cracks it. IMO technical analysis is not going to work. Taking this day by day, week by week, month by month is all we can do. When it blows (which it will) we just be happy that we planned for it.

4 oz · Feb 4, 2015 - 3:19pm

Stacking~~

; ^)

Today was another fine day to add Phyzz at ridiculously low prices!

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