Silver Price Rises on Rising Inflation, Confirms Major Technical Breakout


The price of spot silver has skyrocketed! At the time of writing, the commodity is up over 7% in three days of trading, putting a pretty smile on the silver bulls’ face. Gold and platinum are also doing well. Platinum has a very similar breakout technique and pattern to silver.

Readers know that I am a big fan of precious metals, and silver in particular. I acquire ingots. I don’t really think about the price. Silver, gold, and yes cryptocurrency too, are my anti-debt assets. This is how I bet against central banks. I truly believe that you should own non-trust assets. Inflation is a monetary phenomenon, which means that your fiat currency is weakening, so more of that weaker currency is needed to buy goods and services. Much of it comes down to a crisis of confidence in central banks and governments. I spoke about it several times.

Essentially, I think the odds of a crisis of confidence keep increasing. We might even be in it right now. All eyes are on the Federal Reserve and rising interest rates. The $1,000,000 question is how many rate hikes are possible before breaking governments and consumers who have taken on more debt. The Fed and Fed Chairs keep talking about the toolkit, but many naysayers think there aren’t many tools left. Time will tell us.

This week has been another volatile week in stock markets. But I want to emphasize something very important: silver acted as the real safe haven asset.

I’m not kidding. Earlier this week, gold and bitcoin were down, all due to rising yields and a rising US dollar. The price of silver was a green in a sea of ​​red and continues to rise. Is it due to inflation? Or geopolitics (Russia-Ukraine fears)?

Rising yields tend to be negative for gold, which also impacts the price of silver. The reason is that these metals do not provide a return. However, the metals are rising and holding up well to higher yields. This means that investors could anticipate higher inflation. Inflation is so high that the Fed’s small 25 basis point hikes will be meaningless.

Now let’s move on to the silver board!

I want to start at the $21.50 area. In a previous market moment, I updated readers on the price of silver retesting a huge support zone. This $21.50 area has occurred four times in the last year…make it five now. We actually played the high fuse and the breakout in mid-December 2021. We then played the new test on January 7, 2022.

Recently, my bullish position just increased as we have a breakout confirmation. The price of silver rose above $23.30. This confirmed a double bottom pattern, but others say it looks like a cup and a handle. In a book called “Naked Forex”, the author points out a pattern that looks like a double bottom, but the test for the second bottom is higher than the first. Something like what we see on the silver chart. I simply call it a lower double bottom. Long story short, the author states that this type of double bottom reversal is the most bullish.

The breakout definitely supported the momentum, and we now have two ways to trade silver paper contracts. Again, I prefer to buy the physical commodity, but we can trade the paper contracts for gains. For new traders, just understand that silver is very volatile.

According to the market structure, a new bullish trend has started. As long as we remain above $23.30, expect several higher lows. My first resistance zone is just above $25. Let’s call it the $25.50 zone. From there, prices could pull back, giving us all another entry opportunity. If we break above this price zone, we will be looking at $28 and above.

TradingView Chart

Alternatively, we can make a higher low before testing the $25.50 area. With three big green candles in a row, I wouldn’t be too quick to land contracts right now. Ideally, I would like to enter some sort of recoil. As with all breakout triggers, we expect a pullback to retest the breakout zone. This would mean a return to $23.30. The problem though is that the price of silver looks very bullish, a pullback below $23.30 might not be possible. Buyers could enter the day after the first pullback candle, which means we could form a higher low without testing the breakout zone.

Not trying to complicate things, but the real entry was the break we had above $23.30. Any entry now would be in pursuit, so I recommend waiting for that pullback. To my silver bulls: keep stacking that physical, and we can trade the paper contracts and miners for some nice gains. With the breakout in the price of silver, there are tons of good silver stocks confirming the trends as well.

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