In a dramatic turn of events, the silver market has experienced a significant breakout, potentially signaling the beginning of a long-awaited bull run. Financial analyst Jesse Colombo reports that after months of stagnation, silver prices surged nearly 7% on Friday, breaking through key resistance levels and setting the stage for what some are calling a "silver squeeze."
Key Takeaways:
- Silver price decisively closed above the $32.50 resistance level
- Trading volume more than doubled the prior week's average
- Experts predict a potential run to $50 per ounce in the short term
- Bullish fundamentals include industrial demand growth and declining global mine production
According to Colombo's detailed analysis, the silver market has been primed for this breakout for months. "I've been encouraging investors to remain confident, as I believed silver was on the brink of a historic bull market," Colombo stated. His prediction appears to be coming to fruition as the market shows signs of a powerful upward trend.
The breakout was confirmed by several key indicators:
- Silver priced in euros closed above the €30 resistance level
- Gold, a major driver of silver prices, has been showing strong momentum
- Silver mining stocks, often mirroring investor sentiment, have also broken out of their trading range
Colombo emphasized the potential for a short squeeze in the market, noting, "Swap dealers—mainly bullion bank trading desks—hold their largest net short position in eight years, totaling 38,832 contracts. This is equivalent to 194.43 million ounces of silver, or roughly 23% of the annual global silver production."
This large short position could fuel further price increases as traders scramble to cover their positions. "Given the current size of their short position, bullion banks face nearly $200 million in losses for every dollar increase in the price of silver," Colombo explained.
Colombo's Conditions for Confirming the Silver Breakout
In his analysis, Jesse Colombo outlined several specific conditions that he believed would confirm the next leg of the silver rally. These conditions provide a framework for understanding the current market dynamics:
1. Spot Price Breakout: The spot price of silver must decisively close above the $32.50 resistance level, supported by strong trading volume. This condition was met on Friday with silver's 6.38% surge and doubled trading volume.
2. Euro-Denominated Price: Silver priced in euros must decisively close above the €30 resistance level. This condition was not only met but exceeded, with silver closing above €31.
3. Synthetic Silver Price Index: An index developed by Colombo, representing the average of gold and copper prices, must close above its key resistance zone between 2,560 and 2,640. While this condition wasn't fully met, Colombo noted that the index posted a solid 1.21% gain.
4. Gold Price Momentum: Gold, as a major driver of silver prices, should show strong upward momentum. This condition was met with gold breaking through two key resistance levels since September.
5. Copper Price Support: While not a direct condition, Colombo noted the importance of copper prices finding support around the $4.25 level to provide an extra boost to silver's rally.
6. Silver Mining Stocks: A strong, high-volume close above the $36 to $38 resistance zone for the Global X Silver Miners ETF (SIL) would indicate that both silver and silver mining stocks are primed for a major breakout. This condition was met on Friday.
7. Gold-to-Silver Ratio: A breakdown in the gold-to-silver ratio, specifically a close below the 83 to 84 support zone, would confirm the start of a silver rally and its outperformance over gold. This condition was also met on Friday.
Colombo's comprehensive analysis of these conditions provides investors with a clear picture of the current silver market dynamics. "The technical and fundamental drivers behind silver are aligning," Colombo stated, "suggesting that the price could climb significantly higher, potentially reaching levels not seen in decades."
Adding to the bullish outlook are the fundamentals of the silver market. Industrial demand has been surging while global mine production has been declining, leading to a structural deficit for the past four years. The Silver Institute projects a deficit of 215.3 million troy ounces for 2024, further tightening supply.
As the silver market continues to evolve, investors and industry watchers alike will be keeping a close eye on price movements. With both technical and fundamental factors aligning, the stage seems set for what could be a significant bull run in the silver market.
"The potential for explosive gains has never been clearer," Colombo concluded, hinting at the possibility of silver prices reaching levels not seen in decades.
As always, investors are advised to conduct their own research and consult with financial professionals before making investment decisions.
Source - Jesse Colombo
Jesse Substack newsletter
Follow Jesse on X
Follow on Youtube
Full Silver Price Analysis by Jesse:
Augusta Precious Metals(Full Review) $0 (10 Years) $50,000 "Best Overall" by Money Magazine, Award-Winning for 6 Years, Thousands of 5-Star Rankings Goldco (Full Review) Vary $25,000 Industry leader with over $2 Billion in gold and silver. Top rated precious metals company with buy back guarantee American Hartford Gold (Full Review) Vary $10,000 American Hartford Gold, ranked #1 Gold Company on Inc. 5000, boasts thousands of A+ BBB ratings and 5-star reviews, endorsed by Bill O'Reilly and Rick Harrison..Expand Details
Renowned for its exceptional customer service and commitment to transparency, Augusta Precious Metals has garnered numerous accolades, including "Best Overall" from Money magazine and "Most Transparent" from Investopedia. The company's dedication to educating and supporting its clients has earned it top ratings from organizations such as A+ from BBB and AAA from BCA.Expand Details
From precious metals iras to direct purchases of gold and silver, goldco have helped thousands of americans place over $2 billion in gold and silver. Top-rated precious metals company rated A+ by the better business bureau rated triple a by business consumer alliance earned over 6,000+ 5-star customer ratings Money.Com 2024 best customer service 2024 inc. 5000 regionals: pacific ranked #17 2024 gold stevie award, fastest growing company inc. 5000 award recipient, 8+ yearsExpand Details
With over $2 billion in precious metals sold, American Hartford Gold helps individuals and families diversify and protect their wealth. Their expert team provides investors with the latest market insights and a historical perspective, ensuring informed decisions. Trusted by public figures and praised for exceptional customer service, the company offers competitive pricing on top-tier gold and silver coins, backed by a 100% customer satisfaction guarantee
