Silver Maintains Breakout Despite Turbulence

There was an aggressive and deliberate price suppression slam in the early hours of the morning, but silver is still holding above the critical $50 level, which is an encouraging sign.

I just wanted to give a quick update on where silver stands after some turbulence in the wee hours of the morning, from the perspective of New York time. As I showed yesterday evening, silver finally closed above the critical $50 resistance level that stopped the 1980 and 2011 bull markets dead in their tracks. In doing so, it broke to an all-time high, which I said was a signal that the bull market is about to enter a new stage and heat up even further.

In reality, however, nothing is ever that simple. Frustratingly, there was an intentional slam of silver by the bullion banks below that $50 level in an attempt to thwart its breakout. Thankfully, silver managed to still remain above the critical $50 level. There is a fierce battle taking place at that level as we speak, so I want to show you that and go into more detail about it in this update.

Let’s begin by taking a look at the long-term chart of silver, going back to the 1960s, to highlight the importance of the $50 level. This critical level has become a major psychological and technical ceiling, with many market participants closely watching it. It marked the peak of two significant silver bull markets in 1980 and 2011, both of which were followed by sharp declines. That’s why I’ve been hoping to see silver finally clear this level.

I believe that a clean breakout will signal the start of a much stronger move and a new phase of upward momentum. As I explained last week, silver is highly undervalued in real terms this time around, which makes me believe it has the potential to finally break through $50 and continue much higher from there. However, as I’ll show next, that move won’t happen without a fight.

Silver ended Monday on a strong note, with COMEX silver futures finally breaking above the critical $50 level and reaching as high as approximately $52.50. But then, a sudden and aggressive price slam occurred starting at roughly 1:20 AM New York time. This occurred well outside of regular trading hours, when most traders were asleep and liquidity was very thin.

At that moment, at least 20,000 silver futures contracts (aka “paper silver”) were dumped onto the market. This triggered a sharp sell-off that drove the price below the key $50 level, with silver sinking as low as $48.75 within just one hour. That volume of contracts represents 100 million troy ounces of silver, or nearly 12% of global annual production. In my view, this was a deliberate price suppression effort orchestrated by major bullion banks such as JP Morgan and UBS. I will go into more detail on that shortly.

Needless to say, I was extremely frustrated when I saw what had happened this morning and have been disturbed by it all day. However, I am encouraged by the fact that both COMEX silver futures and spot silver managed to close above the $50 level on Tuesday. That is a sign of resilience and indicates that the breakout, while clearly under attack, is still intact.

Next, let’s take a look at the daily chart of COMEX silver futures to see where things currently stand. As you can see, the price is still holding above the critical $50 resistance level, sitting at $50.40 at the time of writing. That’s an encouraging sign, although I would like to see a more decisive push higher to provide stronger confirmation of the breakout.