Silver has been the leader. Now comes a test of its leadership. Our two key projected support levels were the January topping cluster in the 24s (being tested now) and more importantly, the 22 (+/-) area support from the topping cluster of last spring. Conveniently, support #1 coincides with the rising SMA 50 and support #2 coincides with the now-rising SMA 200.
Sure, silver could very well be taking a normal pullback to its SMA 50, but if this really is a running of the inflation bugs, the 22 area would be quite doable. I’d continue to watch USD’s immediate support along with the Gold/Silver ratio, per this article. I’d rather get a liquidity event over with sooner rather than later. But with Tech firm (got to laugh at those predictable rotations by the algos) the implication is that it’s just disinflation/Goldilocks as yet.
Bottom line: Silver is above the first support level. But it could drop to 22 and remain normal and even the higher low support at around 20.70 and also be normal (albeit painful for loaded bugs). If it takes out the SMA 50 at 23.90 it’s probably going to put on a test of the SMA 200 and/or associated support. If it holds, as you were. The implication for gold stocks would be that either GDX upside gap fill at 40+ is still in play or the gap fill below 28 could actually come about if silver drops to its higher low zone around 20.70.
