Silver Shorts?

As of last week silver managed its ninth consecutive weekly gain.

The last time it closed with a weekly loss was during the week of Xmas, or 12/23/16.

Over the course of its 9 week streak it rallied ~17%, closing last week at 18.37 vs. its 12/23/16 close of 15.75.

Remarkably, this is only the fourth time in history silver has managed nine consecutive weekly gains.  Maybe more remarkable is the fact that:

  • The three previous streaks marked precise and major swing peaks
  • Each peak resulted in immediate and material downside, with draw-downs of 25% once and 28% twice, with each taking but a few weeks at the longest to materialize
  • Two of the three nine week rallies ended in late February
  • I’d also add that though it failed to deliver nine consecutive weekly gains into its all-time high  weekly close of nearly 50 during the week of 1/18/80, it nearly did so, coming one shy with eight instead.

Here are the three previous instances:

The only difference this time around is the fact that in the just-completed nine week move silver only managed its measly 17% rally, vastly undershooting the upside moves during the span of the others’ respective nine-week sprints as follows:

  • 9 weeks into 2/22/74: +88%
  • 9 weeks into 2/18/83: +40%
  • 9 weeks into 5/12/06: +45%

I won’t venture to guess whether the more diminutive rally during the most recent nine week advance implies that any ensuing downside will be less painful than the previous situations.  That said, I would be willing to venture that silver, at least according to history, appears to be positioned in a reasonably unfavorable fashion as we head into the next week’s monthly data dump of ISMs, employment, etc.