July 6, 2022

Price Pullbacks in Silver Becoming Shorter and More Shallow

Silver prices continued streaking higher today on fears of a plunging dollar, rampant money printing by central banks, and talk in Europe of a looming debt restructuring (default) by Greece.

In late afternoon trading silver was up $1.22 to $41.88, a 3% gain for the day.  Since decisively breaking through the $15 price range in early 2008, silver has been in a major bullish uptrend with price pullbacks becoming shorter in duration and more shallow in their extent.

SILVER - COURTESY KITCO.COM

Silver reached an intermediary high of $20.92 in March 2008.  As the financial world headed for a meltdown in late 2008 and every asset class in the world was liquidated, silver experienced a sharp sell off and by October 2008 reached a low of $8.88.  The 2008 low represented a price consolidation of 40% from the base silver had established at the $15 range.

The ensuing recovery in silver took a little over a year before the price once again approached the $20 per ounce level.  In December 2009 silver hit a high for the year at $19.18.  After a brief consolidation below $18 in early 2010, silver broke out of its base in the $18 range  to reach a high of $30.70 in December 2010. The price of silver ended the year up $13.46, for a gain of 78.4% on the year.

In January of 2011 silver again consolidated briefly and pulled back $3.95 or 13% to a low of $26.68 on January 28th.  This month-long pullback turned out to be another fantastic buying opportunity as silver recovered its losses and rose to $36.60 by March 7th.

Over the next 7 trading days, silver consolidated again, declining  from $36.60 on March 7th to $33.88 on March 15th for a loss of $2.72 or 7.4%.  Silver then rallied again to a new annual of $41.37 on April 11th.

Silver’s most recent pullback was the shortest of them all, declining from $41.37 on April 11th to $40.22 on April 13th for a loss of $1.15 or 2.8%. The losses were quickly recovered and a new 31 year high was reached, with silver recently trading at nearly $42 per ounce.

Investors who seized the opportunity to purchase silver on price pullbacks over the past four years have made fantastic profits.  As the bull market in silver has progressed, these pullbacks have become shorter in duration and more shallow in price. This situation seems to be reaching its extreme, where pullbacks last not months, not days, but mere hours. Investors have started to capitalize on even the smallest price declines to increase their positions and drive prices higher.