The picture for silver looks dull and weak, and it has dropped back over the past month or two, like gold, in response to dollar strength. On its latest 14-month chart we can see how, after breaking support in the $16.15 area, it has dropped back to support close to the low of last July, where it is oversold. The intermediate trend must be classed as neutral / down as it is below bearishly aligned moving averages. Having said all that there is a fair chance of it turning higher soon, as in addition to being oversold and at support, its COTs now look bullish, as we can see on the latest COT chart stacked below the 14-month silver chart for direct comparison, with gold’s COTs being more so, and with gold’s seasonal factors now approaching their strongest for the year, silver may come along for the ride if gold now advances, which looks likely also because there is a good chance that the dollar will react back over the near-term, as we have observed in the parallel Gold Market update.
Silver’s latest COTs look bullish, with Large Spec long positions now at a low level. While Commercial short positions did rise significantly last week, a good part of the rise was accounted for by an increase in Small Spec long positions, and the Small Specs are not as dumb as the Large Specs.
On its 10-year chart, silver still looks like it is the late stages of a downsloping Head-and-Shoulders bottom. The fact that this pattern is downsloping compared to the similar one in gold, which is flat-topped, is normal as silver tends to underperform gold at the end of sector bearmarkets. However, for the pattern to retain its promise the price must stay above the support near to last July’s low – if this support fails then it would open up the risk of silver dropping back to the lower support level in the vicinity of its late 2015 lows, or lower, meaning new lows, which would probably occur at the time of a broad based 2008 style asset liquidation, which as we considered in the Gold Market update, is now a growing risk with the property boom running out of steam and the increasing threat to the global economy from trade wars. 
Silver’s seasonal influences are negative this month, in contrast to gold’s, but are at their most positive for the year next month, September, as the following chart shows. However, despite this, if gold rallies this month we can expect silver to follow suit. 
Whilst it is not known for sure how the precious metals will react this time when the broad based asset liquidation occurs, involving an implosion in global property markets and a stockmarket crash, it seems likely that we will we see a rerun of 2008, only considerably worse, which will involve commodities as a whole crashing too, as most everything that can be sold is sold. In this scenario the dollar would be expected to spike briefly as a result of a dash to cash and gold and silver will probably drop hard, but bottom and reverse dramatically to the upside well ahead of the stockmarket hitting its crash lows. In the meantime, and provided that this crash doesn’t occur very soon, a significant sector rally looks likely.