Silver may be nearing a breakout

Illustration of silver reserves piled high in a stack

Something bullish may be brewing in silver.

The TradeStation platform shows silver futures (@SI) up 3 percent in the last two months. Gold futures (@GC), on the other hand are down 3 percent. That’s a odd because the two metals usually move in tandem.

Perhaps even more unusual, silver’s managed to climb despite the U.S. dollar (@DX) pushing higher. That typically hurts precious metals and explains the drop in gold. Silver shrugged it off.

“Silver price seasonality shows it tends to rally from mid-June into the early September period,” said chart guru John Person. He sees evidence of investors building a position in the metal and is looking for move to as high as $20 this summer.

“I see an opportunity to go long the silver ETF (SLV) or apply a bullish or long-call option strategies in the September expiration,” added Person, owner of Person’s Planet and a frequent guest on TradeStation’s Morning Market Briefing.

Yesterday, the Federal Reserve boosted interest rates and hawkishly suggested two more hikes are coming this year. Common wisdom says that’s bad for silver, but @SI still closed at a seven-week high.

The relative strength comes after silver fell to historically cheap levels against gold, as cited on Market Insights at the time. Other times when when the ratio normalized from extremes were followed by rallies in the white metal.

Finally @SI’s chart may interest technicians because it spent more than a month under its 50-day moving average without breaking to the downside. And now it’s trying to rally up through its 200-day moving average.

In conclusion, this isn’t a trade recommendation and everyone needs to do their own homework. But silver may be starting to show signs of life after years of going nowhere.

Silver Futures (@SI) with moving averages and rounded bottom this year.
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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.