Silver has been swinging sideways in a very narrow range for a long time (4 months) and its chart (see below) looks bearish.
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…I’m not a chartist – I prefer facts and data vs dogma and charts, so here’s the data to prove my thesis. I use standard deviations as a percent of silver’s price to determine how volatile silver has been…[and] over the past 4 months…[it has dropped to] 1.7% of its price. This is an extremely low standard deviation.
Here’s what happens next to silver when its 4-month standard deviation is 1.7% (excluding overlapping cases over the past 4 months)…
Click here to download the data in Excel.
This is a medium-term bearish sign for silver. Look at silver’s historical forward returns for the next few months – almost all bearish -but this raises a more important long-term question. I previously thought that gold and silver are in new bull markets. I’m seriously starting to doubt this case.
Perhaps silver is still stuck in a long sideways bear market [and] long periods of low volatility are hallmarks for silver’s historical bear markets. In other words, silver’s volatility shouldn’t be this low if it is in a bull market. All of the above historical signals occurred when silver was in a bear market. None of them occurred when silver was in a bull market.