Silver is selling off during the Asian trade and makes its way to $20 per ounce. The precious metal was lagging during the Yellen-hoopla last week, but as the market baked in Janet Yellen’s comments, both gold and silver began to decline today. The fundamentals of silver are similar to gold, and the breaths outlook of near term inflation is limited, so the downtrend continues. Silver is down 32 percent year-to-date.
The intraday, 4H chart of silver futures show price action punching through a demand zone and looks to head lower. A close below this zone will signal a test of $20 per ounce, most likely prior to the FOMC minutes Wednesday afternoon. Volume spiked on the 4H candle that pierced the demand zone, and volume tapered off going into the evening hours.
The next demand zone is between $20 and $20.15, only .12 cents from where silver trades currently, $20.27 per ounce.
The daily chart shows silver’s next stop once $20 is broken. Silver futures is resting on price action support on the daily chart, but sentiment is still heavily bearish. A break below this current level will lead a move to $20 per ounce. If momentum is great enough, a break of $20 will lead price action to $19 per ounce.
This continues to be both a buyer and seller’s market. Paper assets are sold and physical bullion is bought. Buying paper silver through ETFs, futures and other derivatives is still hazardous to the portfolio.