Small depositors, in general, cannot afford gold. Silver, or poor man's gold, is their 'play'. While gold is ready, silver, at least in DI terms, is still lagging (chart 1).
There's two ways in which silver will be realigned with gold.
- "Out the back door" through massive short liquidation into price weakness.
- "Out the front door on a stretcher" via forced short-covering rally into strength.
As long as stays above $1,600 and displays technical strength, the probability of "out the front door on a stretcher", or a fast and furious short-covering rally, increases substantially.
Besides, silver's money flow setup may not be lagging as badly as its DI suggests. DI readings, a cumulative money flow measure, can hide setups within setups. The long/short concentration index has generated what I call a bullish earthquake. Bullish earthquakes, rare money flow setups, precede significant price rallies (chart 2). Once the ball starts rolling, it won't be easily contained by paper attacks.
Chart 1: Silver London P.M Fixed and the Silver Diffusion Index (DI)
Chart 2: Silver ETF (Silver) and the Silver Long/Short Concentration Index (CI): 1 = Bullish Setup, -1 = Bearish Setup
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