Silver just moved to its 2018 bottom. Not somewhat above it, not relatively close to it – silver’s Friday’s close of $14.14 equals the previous lowest closing price of 2018 that was formed on September 14th. That’s not yet a breakdown, but the implications are severe.

Silver’s Move to the 2018 Bottom

Silver’s decline means breakdowns (on big volume) below the October lows and the rising red support line.

From the long-term point of view, silver seems to have already completed the post-breakdown correction and has now started its next move lower. The moves that preceded the consolidation tend to be repeated after the consolidation is completed and this means that silver is soon likely to break below its 2015 bottom.

This will be a shocking event to those, who were calling the bottom in gold earlier this year. This shock might – and is quite likely to – turn into panic and sharp selling as investors want to limit their losses. The support that is relatively far below the 2015 low and at the same time approximately corresponds to the size of the preceding decline is the area around the $12 level. That’s where we have two 2009 bottoms. None of them is extremely important, but they are the only ones that we have between the 2015 bottom and the 2008 bottom, so they are quite likely to provide temporary support.

Another reason why Friday’s move is so important is the situation in the gold to silver ratio.

With a weekly close above 85, it’s clear that the ratio broke above the previous long-term highs. The next long-term target is the rising red line that’s approximately at the 90 level and the final one is at about 100. Interestingly, with gold at about $1,050 and the ratio at 90, we get $11.67 as the silver price prediction, which is very close to the April 2009 low (the lower one), which is $11.72. The above further validates the interim price target area (around $12) for the white metal.

The full version of today’s analysis includes the details and forecasts for the gold market, and while we’ll keep them exclusive for our subscribers, we would like to tell you about the critical signal that we saw in the gold stocks. It’s about something much more important than the short-term head-and-shoulders patterns.

Gold Stocks’ Critical Indication

Namely, we just saw a sell signal from the weekly Stochastic indicator. This is a big deal, because this indicator confirmed major tops and preceded big price declines many times in the recent past. The signal has been particularly useful since 2011.

The other interesting thing is that we saw lower highs in the past several months and this is characteristic only for the biggest of the declines. We saw this kind of performance of the weekly Stochastic indicator in 1999, in 2008, and in 2012. The last two were obviously excellent times to exit the precious metals market, but the first one appears to be different.