The precious metals are seeing some pressure again today. After seeing some price action slightly in the green earlier in the session, silver and gold came under pressure as the U.S. Dollar index strengthened while the Euro currency fell below the key 1.30 mark.
Silver, like gold, has remained relatively range bound in recent sessions following some serious selling which saw the metal fall from over $32.00 to a recent swing low of just under $28.00. It would appear that for now, the precious metals may remain on the defensive as U.S. economic data generally continues to top forecasts.
This fact, along with the fact that the Federal Reserve is going to leave the money spigot flowing for now, is driving investors into risk assets such as equities. One need only look at a recent chart of the SP500 to see the fed “At work.” Many content that as long as equities continue to climb, the going for silver may be tough.
This argument would make sense-to a degree.. One simply cannot ignore, however, the amount of stimulus that has been poured into markets. As with everything, at some point there will be a price that has to be paid. No one knows exactly when, or what, but there is no free lunch.
While inflation may seem under control now, who knows what type of effect the central bank money printing will have down the road. There will come a time when the rally comes to and the music stops. Some will be left without a chair when that happens…..Don’t be one of them!
Silver and gold will shine again. Precious metals have proven time and time again that they can benefit their holders during times of economic upheaval, geopolitical crises, or periods of high inflation. It is not a question of if-but a question of when. Periods of decline can be opportunistic times to add to holdings of physical metals. The longer term trend still remains to the upside.
For now, silver does remain under pressure as the bears continue to maintain technical control. Thus far, rally attempts have fizzled in short order. The market failed this morning at the 20 day exponential moving average (EMA).
To get some bullish momentum going, the bulls need to take out $29.50 on the upside (Futures for May Delivery.) On the downside, if the bears take out recent lows at $28.50 ish it sets up the potential for additional downside targeting the recent swing low on the weekly charts at $28.00. Below that, the 200 day EMA comes in on the weekly time frame at $27.23 and would likely offer support on the first test.
Chart Source: QST