Study: silver just crashed. Long term bearish for gold and silver


Gold and silver just got crushed yesterday. This is silver.

This is gold.

Gold and silver move in the same direction. What’s bearish for silver is bearish for gold, and what’s bullish for silver is bullish for gold.
Yesterday’s crash in silver is the biggest 1 day drop in almost 2 years.
Here are silver’s historical forward returns when it falls at least -4.5% in 1 day for the first time in 1 year (i.e. first 1 day crash in a long time).

Click here to download the data in Excel.
Notice how silver’s forward returns are mostly random (close to a 50-50 chance of going up vs down). But here’s the more important point: these sort of 1 day crashes don’t happen when silver is in a bull market.
When silver crashes the way it did today while it’s in a downtrend (i.e. is below its 200 daily moving average), it’s a sign that silver is still in a bear market. This is bear market behavior.
Here’s the study once again, but only looking at the cases in which silver is in a downtrend (i.e. is below is 200 dma).

Here are the 2013 and 2014 cases. Notice how they occurred in the broad context of a multi-year bear market.

Here are the 1992 and 1997 cases. Notice how they occurred in the broad context of a multi-decade bear market in which silver just swing sideways in a wide range.

Conclusion

The probability of gold and silver going up after this is a little higher than 50%. However, this study does support a previous study, which suggested that gold and silver are not about to begin new bull markets. They are stuck in bear markets. Gold and silver swing sideways in a wide range when they are in bear markets.

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2 comments add yours

  1. Troy, are u still entering long positions on slv as you mentioned previously ?

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