Charting “guru” Chris Kimble this week had a long term silver chart that posits the theory that silver is very close to having bottomed out. This chart and his discussion refers to silver in US Dollars.
Afterwards we’ll have a longer term NZD silver chart for you with our thoughts too.
Here’s Chris:
Silver; Bottoming process nearly complete here?
“Hard to believe that Silver hit $50 an ounce in 2011? Even though Silver is off to a good start in 2017 (up near 14%), it remains over 50% below the highs of 6-years ago.
Below looks at Silver on a monthly basis, over the past 40-years.
Silver hit the 1979 highs in 2011 (Double Topped) and then proceed to create a series of lower highs and lower lows. The decline took Silver down to its 23% retracement level of the 1993 lows/2011 highs. It is possible that Silver created the “Head” of a multi-year reversal pattern (inverse head & shoulders) at (1).
If Silver is making a long-term bottoming pattern (inverse head & shoulders), the ideal price action would be; create a right shoulder above the left shoulder, where a rally takes off and breaks above the falling neckline, in the $20 zone. At this time the neckline comes into play as resistance. To prove the read correct, breaking above the neckline is a must!!!”
Silver Already Bottomed Out Long Term in NZ Dollars
Silver looks to be moving higher in the long run in US dollar terms alright. There’s good odds that Chris Kimble’s pattern will play out in the weeks ahead.
However down here we buy in NZ Dollars and so it pays to focus mostly on the NZ Dollar silver price action.
If we do that, to our eyes it looks like silver in NZ Dollars has already bottomed out.
Here’s a chart going back to 2009.
In 2015 silver broke out from the downtrend it had been in since 2011. And with the benefit of hindsight we can see that the lowest price was actually reached back intraday in late 2014.
(Note: Want a hand with keeping track of the NZ Dollar price of silver? You should sign up to our daily price alert email as we publish charts in NZ and US dollars every weekday day for silver and gold. You’ll find it easier to select lower risk times to buy. Learn more about that here: Daily Price Alert)
The chart above uses the closing price each day. A.K.A. a daily chart.
But how about we use the weekly closing price instead for a longer term view of the trend? This serves to “smooth out” the daily flucutations.
It actually doesn’t look too different. NZD silver still broke out of the downtrend in 2015.
What about if we go with even longer term closing prices with a monthly chart? So a chart that plots the price of silver in NZ dollars at the end of every month.
Yet again the downtrend from 2011 has been broken. It just happened a little later when using the monthly closing price. Not until early 2016.
But the trend remains up since then. Albeit in a slightly less steep fashion.
So the lesson is make sure you pay attention to the local currency price when determining when to buy. While the NZD silver price is up quite sharply this year, in the long run there is still an awful lot of upside to come. We’re still a long way from the 2011 highs of NZ$60. You can get a quote here.
(Note: Want a hand with keeping track of the NZ Dollar price of silver? You should sign up to our daily price alert email as we publish charts in NZ and US dollars every weekday day for silver and gold. You’ll find it easier to select lower risk times to buy. Learn more about that here: Daily Price Alert)
For more on this topic see: Why Buy Silver? Here’s 21 Reasons to Buy Silver Now
To better understand what technical analysis is, and help with timing when to buy gold or silver and check out this article: Gold and Silver Technical Analysis: The Ultimate Beginners Guide
To learn more about when to buy gold and silver see this article: When to Buy Gold or Silver: The Ultimate Guide