By Andrew Addison
It's time for a switch in strategy: Sell gold and buy silver.
Gold's advance went vertical as it soared from $2,960 to $3,500 an ounce in just two weeks. But momentum failed to confirm the move. Even as gold kept climbing to new highs, the ratio of higher closes to overall closes failed to register new highs. This divergence between price and momentum warns that the uptrend is close to reversing.
By contrast, silver is on the verge of breaking out after a long period of sideways trading action.
In my Institutional View report to clients on Nov. 8, 2022, I reported that my work generated a long-term buy signal on gold at $1,680. More recently, in my April 22 report, I wrote that gold triggered a short-term sell signal. Why? Because as gold's advance went vertical, it was trading at the widest premium to its long-term moving average since 2011 (see chart above). In addition, gold mining stocks failed to score new highs as gold surged to $3,500 -- a negative divergence. The downside risk for gold is back to $3,100-$3,000.
Silver has been in a long stupor. The weekly chart (above) shows that it is preparing to hurdle a large five-year base. From a rounding base, notice that silver formed two higher "box" consolidation patterns just above 30. Currently at $33.58 an ounce, hurdling $35 would trigger upside projections to $45-$50.
Finally, the monthly chart (above) is in the late stages of completing a huge 14-year base that is called a "cup and handle" (because it actually looks like a cup and handle). Once silver is able to hurdle $36, then my work would confirm upside projections to $45-$50.
To capitalize on silver's potential breakout, I recommend buying Hecla Mining, the largest silver miner in the U.S. and Canada. Last week, the Trump administration included Hecla's Libby Exploration Project in Montana in its executive order to increase the domestic production of minerals.
Andrew Addison is the author of The Institutional View, a research service that focuses on technical analysis.
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April 28, 2025 10:46 ET (14:46 GMT)
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