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Silver Prices: "Smoking Gun" May Not Be What Some Think

There is more than one way to explain the white metal's rally since late 2016

by Nico Isaac
Updated: February 28, 2017

Since the end of 2016, silver investors have faced a difficult challenge -- namely, to navigate one of the biggest alleged scandals to face a single financial market in some time.

The accusation: A few of the world's largest brokerage firms have been illegally finessing silver prices since 2014.

Explains a December 4 Bloomberg:

"Plaintiffs have 'smoking gun' evidence, including secret electronic chats involving silver traders and submitters across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices."

The news left many marketgoers reeling, as this December 22 Silver Seek observes:

"The one thing silver investors want to know, is when will the manipulation of the silver prices finally end."

That's a serious concern. And one we trust will be resolved by the appropriate legal authorities, if indeed there was some market manipulation.

But here's what we find really interesting: Manipulation or not, before silver's latest rally took off in earnest, there also was a different kind of "smoking gun" on its price chart -- namely, a bullish Elliott wave pattern.

On January 3, our Metals Pro Service identified a significant bullish set-up on silver's price chart:

"Silver pushed high enough to suggest an important bottom has formed at 15.67 and the trend is turning up. The outlook is tentatively bullish while price holds above the low. Approaching 17.30 would raise confidence that wave (B) has bottomed and wave (C) is beginning to rise with potential through the 21.00 area

"Broadly (360-minute chart), silver may be near the start of a multi-week/multi-month rally."

From there, silver prices embarked on a powerful rally to three-month highs, as illustrated in the next chart:

Today, the case involving the alleged silver manipulation scheme is back in court, and it may take a while until the market gets a solid ruling.

But right now, thanks to Elliott wave patterns unfolding on silver's price charts every day, we already have a solid ruling on whether the metal's upward trend is set to continue.

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