Silver has a long history as the most volatile precious metal. Since futures began trading in 1971, the price of silver has traded as high as $50.36 and as low as $1.375 per ounce. Both the high and low occurred in 1980 and before, but the precious metal moved to lows of $3.5050 in 1991 and as high as $49.82 in 2011. Source: CQG
As the quarterly chart shows, silver looks like a barbell with highs in 1980 and 2011.
Silver is an industrial and a precious metal. Many market participants feared the commercial applications of silver died with the advent of digital photography that replaced the requirement for silver nitrate in developing photographs. However, necessity is the mother of invention and computers, cell phones, solar panels, and other technological innovations over recent decades have not only replaced the demand lost because of changes in the photographic market, but the requirements for silver have increased.
Precious metals prices moved to a new range in the new millennium, and silver has not traded below $10 per ounce since 2008, in a decade. The move down to that level after the global financial crisis when risk-off caused the prices of markets across all asset classes quickly corrected to the upside. Recently, the price of silver has been trading around the $17 per ounce level. After a brief dip down to lows of $15.555 in mid-December last year, the precious metal has moved back to the $17 level. Since September 2017, each time the price of silver approaches the $17.50 level selling appears and the price retreats. At the same time, the prices of gold and platinum have been moving higher at the start of 2018 and palladium traded to a new all-time high at over $1100 per ounce. Three of the four precious metals that trade on the futures exchanges have displayed bullish price patterns. However, silver has been unable to conquer the $17.50 level, yet.
I have been trading silver since the early 1980s, and the one thing I have learned about buying and selling the volatile metal is to always be prepared for the unexpected. I know a few things about the silver market, in 1995 I was part of a team of four traders that took the biggest silver position in history. Our long was bigger than the Hunt Brothers, and at the peak, we held around one-quarter of a billion ounces of the metal.
Silver tends to move suddenly and ferociously when few market participants expect. Since September, silver has been bouncing up against that $17.50 level in an attempt to erode the selling pressure, and it may be only a matter of time before it breaks through. When silver moves into a trend, watch out because it can provide shock and awe like no other commodity. 2018 may be the perfect year to trade silver as it looks like it is positioning to make a move sooner, rather than later.