The silver market has retreated somewhat during Thursday’s trading session, as bond and commodity markets continue to be extremely volatile. As long as the negative correlation between silver and the dollar persists, the silver market will be susceptible to the US currency and, by extension, bond market rates. If the dollar begins to see a substantial upward trend, it should require less dollars to purchase an ounce of silver.
Remember that silver is an industrial metal, not a precious metal. This is especially true today that there are so many green energy programs around the globe, so the fact that we are slowing down is probably not helping. However, it is also important to note that the most recent United States law has incentives for green energy, thus silver may outperform gold for a period of several months.
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In any case, the technical analysis will pay special attention to the $20 level, which is a large, round, psychologically significant number and a region that will generate a great deal of noise. If we were to break below that level, it is feasible that the price may drop to $19. Alternatively, if we break above the week’s highs, we could target the $22 level. Ultimately, I believe we see a great deal of volatility more than anything else, so do not be surprised if the short-term charts of this market show significant movement in both directions. Position size will be the most crucial factor.
