Pinnacle Activity Ticker
Silver Prices Going Higher
Pinnacle Digest writes: In Adam Hamilton’s latest article he discusses silver’s recent market activity. Since the middle of summer, silver prices are up nearly 33%. This has some traders booking profits for fear of a major pullback given how quickly it ran. Hamilton notes that while silver may appear overbought in the short-term, it is in fact looking primed for a substantial move higher. He stated that “its recent strength actually looks like the vanguard of a major new upleg.”
There is much skepticism right now surrounding silver according to Hamilton. And the speculators are leading the charge, which for silver, is par for the course. In our interview with Hamilton this past weekend he stated “Silver has always been one of the ultimate speculators' playgrounds. The major reasons are its small size and low price per ounce. The value of all the gold ever mined dwarfs the value of all the silver ever mined. The premier gold ETF GLD has holdings worth $74b, while silver's equivalent SLV is only worth $11b. The smaller the market, the less capital involved, the easier it is to see wild volatility in both directions when more mainstream traders start getting interested in it.”
Hamilton points to the massive run-up silver experienced in the spring of 2011 as speculators ran the price. Once it became wildly overbought and greed was the only thing driving it, silver proceeded to lose 45 percent in the next 14 months. Hamilton explains the reasoning behind these violent swings:
“Remember that the job of any correction is to rebalance sentiment, to eradicate the greed and euphoria that necessitated that correction in the first place. So the bigger the upleg leading into a major topping, the bigger the subsequent correction will have to be. Thus it shouldn’t be the least-bit surprising that silver’s biggest upleg by far of its entire bull was followed by its biggest and longest correction.”
Hamilton believes silver bottomed out in late June of this year as sentiment toward the metal was at all-time lows. And silver’s price this summer was pinned down near 19 month lows with fear and apathy reigning supreme. Considering the massive downfall for silver prices, this latest three month rally really hasn’t been all that impressive according to Hamilton. And he believes there is still a ton more upside left in the precious metal. As he stated in our interview with him this past weekend, it doesn’t take as much capital to move silver prices because the market is so much smaller than most. Given its size, the market is easier manipulated and thus much more volatile.
“Perspective is everything in the markets, so we’ll start with a long-term silver chart. Most sizable moves look excessive on short-term charts, and silver’s latest is certainly no exception. But traders worried that silver’s latest surge is too big and sharp to be sustainable are trapped in the tyranny of the present. From a broader strategic perspective, silver’s recent strength simply looks like a young new major upleg” stated Hamilton.
This latest upleg in silver prices of 32% in just under 3 months may seem dramatic, but when compared to previous rallies (for silver), in even less time, it is actually quite insignificant. And when you include the fact that silver was so heavily beaten down over the prior 14 months (and was at 19 month lows before the recent rally), you can understand why Hamilton believes this is likely the start of a major upleg, not a top forming. As Hamilton states in his latest article “ The only way to earn big money in the markets is to be brave when others are afraid and afraid when others are brave. Buy low when no one else wants to, and then sell high when everyone else wants to buy.”
Click here to read Adam Hamiton’s latest article on silver’s historical rallies and why this could be the start of a new one.