Structurally, Silver Attempting a Major Low

To preface I am not a precious metals Bull. I'm not a Gold Bug, I'm not a "perma" anything. I like to think of myself as an opportunistic realist when it comes to the markets.

Silver appears to be in the process of setting a major low and potentially initiating a new Bull market in the near future.

-Currently it takes 80 ounces of Silver to equal one ounce of Gold on an absolute basis. 80-1 tends to be a major turning point for the ratio throughout history. Only a couple occurrences have exceeded that disparity.  The historical market average is about 50-1, although there is a fundamental argument by some that the real ratio should be closer 16-1. The all-time historical peaks for the ratio are 98-1 and 92-1.

-SLV:GLD Ratio is the lowest since 2008 and lowest since the $SLV began trading in 2006.

Typically Silver is the beta play of the precious metals and will lead Gold during a Bull run but will under perform during a Bearish trend. Trend changes tend to occur when extremes are reached between the two . The previous low for the ratio in 2008 re-ignited Silver's massive Bull rally into mid-2011.

It should be noted that at Silver's peak value in Feb 1980 the ratio was 15-1. The other high in April 2011 had a ratio of 30-1, both well below the historical ratio average and both far away from its current value.

A weekly Descending Wedge pattern is complete. We've seen volume expansion on the breakout and subsequent rally after the throwback attempt.

Silver Daily shows a clearly defined resistance level at $15. A breakout above 15 would confirm the intermediate-term uptrend with a higher low/higher high pattern.

There is a very important confluence of resistance at $15 for $SLV. It is also where the 20 Month SMA resides and the downtrend line from the 5-year bear market.

Breaking out above this area would align all major timeframes and confirm the higher lows on both the weekly and daily charts.

For risk management purposes we would only want to be Long above the $14 swing low on a weekly closing basis.

Bottom Line: A breakout above $15 makes me very bullish and Long SLV. It appears to me that a major secular bottom could be in place.