The silver market is showing several multi-year (even multi-decade) extremes. That indicates a big move is underway.
Since its peak in 2011, silver lost approximately 70% of its value. Since last November, silver has formed a support area on its chart right below $16.00 per oz. That structural trendline is being tested right now, as seen on the next chart (red horizontal line). We really are at a pivotal point.
Note how this is the 5th time since last November that the trendline is being tested. That is of huge significance. Chart-wise, a double bottom is important, so imagine what a “quintuple bottom” means.
The Commitment of Traders report for COMEX silver futures positions at the close of trading on Tuesday June 9th showed that 18,028 short contracts were covered by commercial traders, which is one of the largest changes in COMEX history. Three weeks before, the number of short contracts added by commercial traders were 19,706 which makes for another historic change.
The open interest currently stands at 189,524 contracts, the highest in history. Clearly, something is up in the silver market.
The rate of change in short positions by commercial traders, one of the key indicators we are monitoring, has moved aggressively from bearish to bullish in a matter of 3 weeks. It indicates there is a lot of tension in the silver market, and the breakout or breakdown is going to be explosive.
Given the large open interest in COMEX silver, a “false breakout” would invalidate that view. The pivot price is $16.50. Any sustained move above or below that price will determine the next cycle.
It is almost impossible to predict in which direction it will go. What we do know, however, is that it will be explosive.