Is silver breaking out of its trading range?


For most of the past two years, silver has been trading in a range between its $22 support and $30 resistance as many traders waited for a breakout one way or the other. While many commodities have soared in recent years with the return of inflation around the world, silver’s trading action has not been spectacular, surprisingly as it has an established reputation. long-standing as a hedge against inflation.

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Silver has been falling below its key support level of $22 for the past few weeks, which is a sign of technical weakness. If silver manages to rally above the $22 level, it would negate the recent bearish signal and could pave the way for a rebound. If silver stays below $22, however, that would bring the $20 support level into play. If silver eventually manages to break below the $20 support level, it would likely portend even more weakness to come.

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The longer term silver chart shows the $22 to $30 trading range and the $20 support level which dates back to 2008 (this level is important due to the number of times silver has bounced ):

The prices of silver and many other assets have fallen in recent months as global central banks raise interest rates and pursue other forms of monetary tightening to contain inflation. If inflation remains persistent, central banks will continue to tighten monetary policies aggressively, which could put additional pressure on money in the near term. Longer term, however, I am a strong proponent of physical silver as an investment due to my belief that the global economy is dependent on monetary stimulus (i.e. interest rates). low interest and “money printing”), which will ultimately lead to much higher silver prices as central banks are inevitably forced to once again inject liquidity into the global economy.

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