As we get ready to head into the month of September, the silver market is potentially set up for a major short squeeze.
Potential Short Squeeze In Silver
August 28 (King World News) – James Turk: There has been some talk recently about a potential short squeeze in silver, Eric. I think there is something to it.
What I’ve been hearing is similar to the rumbling about a silver squeeze 2-1/2 years ago. Silver back then started building some momentum but was stopped at $30.
You may recall the response of the regulators after silver was driven back. They acknowledged that they had ‘tamped down’ the silver price. They may not be able to do that this time around. A lot has happened over the past couple of years…
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The key to successfully suppressing the price of a commodity is to own or have access to a lot of it. You need the physical commodity to satisfy those who want the real thing – a tangible asset – and not just some paper representation of it.
And there’s not much physical silver around. Those who have owned it through all of the market shenanigans to which silver has been subjected are truly strong hands. They are not going to let go of their physical metal at these low prices. So a lot of the metal visible in various warehouses is locked up tight.
What’s more, the silver that has come on to the market the past couple of years from mining and recycling is being steadily accumulated by those who recognise its undervaluation. How many other commodities are trading at less than 50% of its 1980 high price?
That silver is being accumulated is clear from the technical picture presented in this weekly price chart.
Silver’s Massive 26 Month Reverse Head & Shoulders Pattern
After the run-up in price from the pandemic low, I’ve been recommending the $22-to-$24 area as a good buying area to accumulate physical silver. Then last year we got a multi-month bear trap, but it was a head-fake that is now turning into a huge head-and-shoulders base. These types of accumulation patterns when completed often mark the beginning of a new uptrend.
We all know that markets can do anything. They can surprise on the downside, but also on the upside. I’ve been patiently waiting for silver to break higher. It’s an upside break that I think will surprise many, and the reason is not complicated.
The Big Break Is Above $26
The silver price had been tamped down so regularly and for so long, it’s a market that is off nearly everyone’s radar screen. That will change quickly if silver completes this H&S pattern. To do that, Eric, silver needs to break above $26. I think that will happen soon, before the end of the year and perhaps as soon as September.
Once $26 is hurdled, whenever that happens, I expect there will be a tidal wave of money coming into the market that will launch the silver rocket from this huge base that has been building for two years.
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