MAY 23, 2018
The silver price has served as a trading lullaby for over a year now, tightening into a very narrow range and offering little in the way of volatility in either direction. In fact, you have to go back a full five years to find a time it wasn’t rangebound between $15 and $20.
This was also the essential case from 2009 to early 2011. Then, once breaking out to the upside, silver barely took a breath prior to touching $49.45.
It can feel as if there is no urgency whatsoever when an investment languishes in a range for a long period of time. It was at that price yesterday, last week, six months ago. Will it be there tomorrow? Maybe. Timing is always the great unknowable variable. The price you usually pay for making the big money later, and eventually being proven right, is having to demonstrate patience first, buying when prices are low and market interest is elsewhere.
A wedge has formed in the silver market, and over the past three years, the lows have been higher and the highs lower. The price action in silver reminds me of a rubber band that is stretching more and more each day, week, and month since reaching a critical low at the area of technical support at the December 2015 low of $13.635 per ounce.
One can only stretch a rubber band so much until it snaps. In the silver market that snap will amount to a move outside the trading range that has sent historical volatility to the lowest level at 11.64% since 2001 when the price of the precious metal was at just over the $4 per ounce level.
Silver could be poised for a significant move on the upside as the range has narrowed to a point where a technical breakout could attract hordes of buyers looking to hop on a propel a trend to the upside.