Silver's Historical Extreme: A Lesson in Overbought Markets

Back in October 1979, silver bottomed at $16.06 after a multi-week decline. What followed was a spectacular rally—within just 2 months, it surged 74% to close at $28 by late December. The 14-week RSI was already flashing warning signs at 91.85.

But that wasn't the peak. Over the next 3 weeks, silver added another 70% in gains, pushing the RSI to an unprecedented 96.70—the highest level ever recorded on that timeframe. Extreme overbought conditions. And then? The crash came.

This historical episode perfectly illustrates a critical principle: when momentum indicators hit absurd extremes, reversals often follow. Whether it's silver in 1979 or any asset today, RSI readings above 90 rarely hold for long. The market forces a correction.

The takeaway? Monitor those overbought signals. They're not always sell signals, but they're certainly yellow flags worth respecting.