Silver: Daily Cycle Low About to Confirm

Key Takeaways

• Silver has declined approximately 8% since last week and is currently within the daily cycle low timing window, with a potential reversal forming.
• A bullish DSS Bressert momentum cross, swing low pattern, and trendline break would confirm the cycle low and signal a long entry opportunity.
• The 2022-2030 macro-8-year cycle places 2026 at its halfway point, meaning current pullbacks may represent significant long-term buying opportunities.
• The gold-to-silver ratio rising above 63 is viewed by many cycle analysts as a historically favourable level for silver accumulation.

From a technical standpoint, the signals for a daily cycle low are:

• Forming within the timing window (rare exceptions such as half cycle low inversions and outlier examples can override these)
• A bullish momentum cross (indicators like the DSS Bressert can show this)
• Swing low pattern
• Trendline break

As noted in last Wednesday's article: "we have the DSS Bressert momentum indicator starting to turn down, which would fall, along with the price decline, into the upcoming daily cycle low timing window, which is drawing near. This falling period would create a downward sloping resistance trendline."

Today, the DSS Bressert has moved to the lower range, with a clear trendline formed on the price decline of 8% down since last week, and we are currently within the daily cycle low timing window.

A bullish DSS cross, swing low pattern, and a break of this trendline are expected within the current timing band, which could take another few days to a week.

A daily cycle low confirmation provides an opportunity for longs with tight risk management.

With silver being just halfway through the macro-8-year cycle (2022-2030), 2026 is the year of the macro half-cycle-low, which overall involves consolidation, volatility, and opportunities on pullbacks for the long-term allocation.

It is therefore fair to say that even if this daily cycle low yields to a lower low (as the macro half-cycle low) later this year, of which there is no guarantee as the half-cycle low could form at a higher price level than the current daily cycle low, the current decline still presents as a significant opportunity within the larger 8-year cycle.

Finally, with the gold-to-silver ratio having risen from 60 to 63 in the past week, and an expectation among many analysts that this ratio could fall in the decades to come, any pullbacks this year in silver with a gold-to-silver ratio above 50 are long-term opportunities to dollar cost average into the market.

The chart below shows how the gold-to-silver ratio (light blue) behaved over the current 80-year socioeconomic cycle known as the Four Turnings. The previous fourth turning, which ended in World War II, saw the GSR fall sharply after its completion. The GSR then spent 40 years below 50, which is the expectation held by many cycle analysts for 2030-2070, though history is not guaranteed to repeat.

Picking up silver on pullbacks at a GSR above 50 could be viewed as a centennial trade, keeping in mind future generations.

A slow and steady dollar cost average approach allows you to take advantage of market pullbacks as they present themselves.

Ainslie Bullion offers physical silver for clients looking to build long-term exposure to the metal. If you would like to understand how silver fits into a broader portfolio strategy, our team is here to help.

This article is general information only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial adviser before making investment decisions.