Silver Stands Tall as the Fed Draws Nigh

Silver had some fireworks in July (biggest monthly gain since at least 2006). It had a brief crash on August 11, but quickly rebounded and has formed an increasingly tight range since.

This kind of price action is potentially bullish because silver has only advanced for a few months. That means there are fewer investors with long-term winning positions, and therefore less potential for major profit taking.

During the consolidation, Bollinger Band Width % has contracted all the way back to 7 percent, its lowest since July 7. (When XAGUSD was coiling for the last move.)

The 30-day simple moving average (SMA) has also caught up with price. This was a useful indicator two months ago before the breakout occurred.

Finally, there’s a potential catalyst as early as tomorrow when the Federal Reserve is expected to repeat its pledge to keep interest rates lower for longer. That’s usually a positive for precious metals like silver (and gold).

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