(Jesse Colombo, Money Metals News Service) Over the past few months, I’ve maintained a consistently bullish outlook on copper, anticipating a rebound off the $4 per pound support level and a strong rally.
This scenario has particularly intrigued me because a surge in copper would provide a significant tailwind for silver. I believe copper’s sluggish performance has been a key factor holding silver back, as the two metals are highly correlated, with arbitrage algorithms reinforcing their relationship.
In the past week, my expectations were validated when copper broke out of a major triangle pattern that had been forming since May.
As the chart below illustrates, copper rebounded off the $4 support level at the start of January, quickly surging higher and breaking out of the triangle pattern—a strong signal that further bullish momentum is likely ahead.
Several factors have fueled this rally, including technical buy programs kicking in, stockpiling in anticipation of potential tariffs, and expectations of a major stimulus program as China’s economy continues to suffer.
Additionally, robust demand stemming from electric vehicles, data centers, and renewable energy has further supported copper’s strength.
The longer-term weekly chart provides valuable perspective on copper’s recent breakout and highlights the critical $5 to $5.20 resistance zone overhead—my next price target now that copper has broken out.
A decisive break above this zone should herald a full-blown bull market, which would also be highly beneficial for silver. I’ll explore this correlation in more detail later in the article.
I frequently show a proprietary indicator I developed, the Synthetic Silver Price Index (SSPI), which helps validate silver’s price movements and filter out potential fakeouts.
This index is the average price of copper and gold, with copper adjusted by a factor of 540 to prevent gold from disproportionately influencing the index. The SSPI closely mirrors silver’s price movement, even though silver itself is not an input.
I’ve been highlighting how the SSPI has remained below the critical 2,600 to 2,640 resistance zone, emphasizing that a breakout above this level would serve as a strong bullish confirmation for silver.
As of Friday, thanks to the impressive rallies in both copper and gold, that long-awaited breakout has finally happened! This signals that a strong breakout in silver is likely imminent.
As the chart below illustrates, gold is in a strong bull market and recently broke out:
Another key factor that could drive copper, silver, and gold even higher is a potential decline in the U.S. Dollar Index. Since commodities typically move inversely to the dollar, a decline in the index would provide a strong tailwind for these metals.
Since October, the U.S. Dollar Index has staged an unexpected and powerful rally—largely sparked by the growing realization that Donald Trump would win the U.S. presidential election—which has put significant pressure on copper, silver, and gold.
Now that President Donald Trump is officially in office, there has been a “sell the news” reaction as traders reassess whether the dollar’s sharp surge was overdone.
Notably, the Relative Strength Index (RSI)—a widely followed momentum indicator—has shown significant weakening and divergence, a pattern that often precedes pullbacks. The U.S. Dollar Index recently broke below its uptrend line, which had been intact since the rally began in October.
If it decisively closes below the critical 107 to 107.5 support zone, it should signal a deeper decline—an outcome that would send copper, silver, and gold soaring.
Another potential bullish catalyst for copper, silver, and gold is the possibility of a massive stimulus “bazooka” from China to counter its deepening economic crisis.
With its real estate and stock markets plunging, an estimated $18 trillion in household wealth has been wiped out—an economic crisis akin to China’s version of the 2008 Great Recession.
Meanwhile, Chinese government bond yields have collapsed to record lows, signaling a deepening deflationary spiral.
Finally, with all that in mind, let’s turn our focus to silver itself. COMEX silver futures recently broke out of a consolidation pattern that had been forming since early November—a promising bullish signal.
The next key test is securing a strong close above the $32 to $33 resistance zone, which has repeatedly acted as a barrier since May.
In short, copper’s breakout signals further upside for the metal, which bodes well for silver due to their strong correlation.
At the same time, gold remains in a powerful bull market, creating additional support for silver, which tends to take cues from both metals. If the U.S. Dollar Index finally experiences a meaningful pullback, it would provide another major tailwind for all three metals, given their inverse relationship with the dollar.
The final hurdle for silver is a decisive close above the key $33 resistance level—once that happens, a new bull market in silver should be underway.
Jesse Colombo is a financial analyst and investor writing on macro-economics and precious metals markets. Recognized by The Times of London, he has built a reputation for warning about economic bubbles and future financial crises. An advocate for free markets and sound money, Colombo was also named one of LinkedIn’s Top Voices in Economy & Finance. His Substack can be accessed here.
