SVR 1D Chart Analysis

15 мая 2020 г.

Hello again folks, this time we are going long in Silver. This is a good opportunity for all those who lost money within our RRSP or TFSA accounts to get some of it back!

For those of you who follow us, as per our usual technique of combining technical indicators with fundamentals we have gone long in Silver.

Technical Analysis:
The ascending triangle has broken through today at the 1/3 point of the base, which has always been a strong signal to buy as the jump is generally a minimum of the height of the triangle. This gives us a short-term price target of around $9.50 or 12% jump from today's close. The 20 day moving average is closing in on the 50 day and if that crosses there is a very high possibility of a 50-200 crossing (Golden-cross) as well.

Fundamental Analysis:
We want to talk about two things when we talk about Silver (the metals) fundamentals.
1. Why is it valuable?
2. How is it undervalued at the moment?
Answer:
1.
Silver is rare metal on earth's crust which is also an excellent conductor of electricity, has antimicrobial properties, very ductile, and non-toxic. All of these combined makes Silver a good consumer metal too, that is why everyday we are using up silver and depleting it's ores. It is also a nobel metal which means it doesn't corrode or oxidize and therefore, can be stored for years without any deterioration just like Gold.

On earth's crust Silver to Gold is found at a 19:1 ratio, and almost all great ancient civilizations have used Silver as money or store of wealth again, just like Gold.

2.
As per the above ratio, if Gold is valued at 1900.0/ounce Silver is supposed to be valued at 100.00/ounce. This means in today's value when gold is at ~$1700.0 per ounce, silver should be no less than ~$89.0.
In the Roman empire the price of silver to gold was only 12:1 but in today's world the price ratio is currently 110:1. Now, some might say that because people like to store their wealth in Gold and not Silver the demand to supply is now governing it's modern day pricing.
There are two arguments to that, first Gold is not as widely used as Silver and that leads to rapid depletion of the metal. With current prices of Silver recycling process can't offset the cost and thus, making it almost impossible to get back what is lost to consumption. The second argument is if you go back to the 2008 great depression price of Silver went up in the 40s due to inflation and higher consumption after the downturn.

With governments around the world printing unlimited amounts of money, inflation is bound to hit the entire World!

All of these makes a compelling case for Silver bulls of today.


Summary:
Long positions taken when Triangle was broken towards the top. Holding long positions to $9.50 minimum, if Golden-cross (50-200) happens hold for a little longer. Protect trades with coming back inside the triangle shown (below $8.30 range).

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Best of Luck!