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about an imminent silver breakout that could quickly push prices to $50. During this time, I've observed significant investor cynicism, as many grew frustrated with silver's sideways movement over the last five months. In that content, I encouraged investors to remain confident, as I believed silver was on the brink of a historic bull market.
Gold, a major driver of silver prices, is generating a strong tailwind for silver after breaking through two key resistance levels since September. By every measure, gold is in a confirmed uptrend, and I believe it’s on track to reach in the near future. This momentum should continue to bolster silver’s rally. While gold reaching $3,000 might a bit far-fetched, it's actually quite realistic, as it's just over a 10% increase from today’s price.
The long-term gold-to-silver ratio chart reveals that silver is currently significantly undervalued compared to gold, indicating that silver has much more room to rise in order to catch up. If the ratio were to revert to its historical average of 52.8 since 1915, even without any increase in gold’s price, silver would be valued at a respectable $51.55 per ounce.
There is a high probability that silver will quickly run to $50 in the course of this rally. I'm focusing on $50 as a relatively short-term target because it’s a significant psychological level and the peak reached during both the 1980 and 2011 rallies. One of the reasons why I’m so bullish on silver is because its monthly chart reveals a recent breakout from a massive, two-decade-long triangle pattern.
A key condition for a short squeeze is the presence of unusually heavy short positioning in the asset. This is currently the case in COMEX silver futures, where swap dealers—mainly bullion bank trading desks—hold their largest net short position in eight years, totaling 38,832 contracts. This is equivalent to 194.43 million ounces of silver, or roughly 23% of the annual global silver production—a staggering figure.
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