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Silver May Jump to $100, Citigroup Says: Technical Analysis

Silver May Jump to $100, Citigroup Says
Five hundred gram silver bars are displayed in an arranged photograph at the Istanbul Gold Refinery in Istanbul, Turkey. Photographer: Kerem Uzel/Bloomberg

Silver may more than double to $100 an ounce if the current bull market follows similar patterns seen between 1971 and 1980, according to technical analysis by Citigroup Global Markets Inc.

The attached chart shows spot silver had “two legs up” with an interim corrective move down in the last major bull market from November 1971 through January 1980, Citigroup analysts led by New York-based Tom Fitzpatrick wrote in a report. In the current uptrend that started in November 2001, the metal jumped 5.8 times through March 2008 before slipping 60 percent, they said. The price then rebounded and tested the 1980 high earlier this year, they said.

“If the final rally in the last bull market repeated then we can expect $100 over the long term,” Fitzpatrick and two other analysts wrote. “While the high so far this year was at the same level as the peak in January 1980, we are not convinced that the long-term trend is over yet.”

Silver for immediate delivery has dropped 21 percent from an all-time high of $49.79 an ounce on April 25. Still, the precious metal has more than doubled in the past year and is the best performer on the UBS Bloomberg CMCI Index. It declined 0.4 percent to $39.26 an ounce at 9:22 a.m. in Singapore.

“The move down from the April high this year has come to an end and the double bottom is a good platform for a turn back up,” they said in the July 15 report. Fitzpatrick confirmed July 20 via e-mail that their view is unchanged.

A weekly close above $38.84 would confirm the break higher, opening the way for $44, the report said. Spot silver closed at $39.3050 last week. “A test of the trend highs again at $49 would not surprise us.”

Technical analysts watch for patterns on daily charts, such as moving averages and resistance levels, for clues to price direction.

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