Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Where Is Silver Heading Next?

Commodities / Gold & Silver 2009 May 31, 2009 - 08:39 PM GMT

By: Roland_Watson

Commodities

Best Financial Markets Analysis ArticleExcitement has returned to the silver market as the sister metal of gold advances to highs not seen for ten months. Where is silver headed? Will it take out $21 with ease and head onto highs that evoke memories of 1979?


Here is the background to this latest installment in the silver bull story as shown in the chart below. After a grinding bear market of 23 years, silver entered a new bull market on 21st March 2003. This bull will last 20 to 30 years as we enter an age of increasingly greater inflationary forces brought on by Baby Boomer retiree demands, Peak Oil and Silver as well as the underlying upwave of the well known Kondratieff wave.

In terms of technical analysis, we believe silver will trace out an Elliott wave impulse which consists of three upwaves and two downwaves. The first upwave called wave 1 (top of graph circled "1") started on the 21st March 2003 and ended an exact Fibonacci 5 years later on the 21st March 2008. Silver is now in wave 2 (circled 2 in bottom right corner) and despite what you may read about a renewed silver bull, this is in fact a rally within this ongoing wave 2 correction. The reason we believe this is twofold. Firstly, it is unlikely that a 5 year bull move will be followed by a correction wave that only lasts 8 months (13% of the wave 1 duration). Secondly, silver corrections tend to be protracted as we can see in the smaller wave 2 and wave 4 corrections of 2005 and 2007 which you can see marked on the chart.

Our expectation is that this rally will approach the March 2008 highs of $21 but not decisively take them out. This is what we call a wave B rally. Wave A took 8 months to complete (another Fibonacci number) and this wave B will likely take as long to complete. If the wave B began in November 2008, we would expect it to finish sometime this summer.

Wave B will be a 3-wave affair with an initial upmove, a pullback and a final burst to a climax. The diagram shows these three components of the B wave rally as they unfold before our eyes. After that silver will experience another multi-month drop which will take it possibly down to the low $10s at worst before the final death throes of the wave 2 finish to usher in wave 3.

The fundamentals that will propel wave 3 will be similar to wave 1 as the economy recovers, silver demand picks up industrially but again inflationary pressures begin to bear as commodity demand from China and elsewhere tightens. The inflationary effects of the worldwide credit crunch bailout will also finally filter through but we also expect Peak Oil to finally and decisively appear and oil to breach $200 and beyond. Wave 3 will occupy most of the next decade.

Wave 3 will not be the biggest move which is reserved for the final wave 5 blow off which will happen in the 2020s. This will be the equivalent of the 1980 blow off and silver will by then be in the hundreds of dollars as peak silver now gets a grip as well as the US dollar sinking under the combined effects of the Baby Boomers bankrupting the Medicare and Medicaid systems. You will just not believe how silver will perform in those days ahead but for now it is enough to consider your increasing silver hoard and expect great things.

In the meantime, silver continues to whipsaw and entertain its old friend volatility in this deflationary correction wave 2. Those who buy silver now and have a 10-20 year horizon will not be disappointed. Those who live for the week or month are advised to hold onto their silver positions but expect a multi-month peak in the summer months ahead.

By Roland Watson
http://silveranalyst.blogspot.com

Further analysis of the SLI indicator and more can be obtained by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain the first issue of The Silver Analyst free and learn about subscription details. Comments and questions are also invited via email to silveranalysis@yahoo.co.uk .

Roland Watson Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in