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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

The Silver Bull Market Is Over?

Commodities / Gold and Silver 2012 May 04, 2012 - 05:48 AM GMT

By: Investmentscore.com

Commodities

Best Financial Markets Analysis ArticleIs the Silver Bull Market Over?  This is one question that we feel very confident that the answer to it is no; but still we are specifically watching for articles or news stories suggesting that the precious metals bull market is over.  We have seen a few articles announcing the end of the metals bull market and we will explain why this is significant to us later in this article.  But first, there are a host of reasons why we think the bull market in precious metals is alive and well and we will address a few of these reasons in this article.


Basic price performance of the precious metals market simply does not match that of other bull markets.  Yes silver did rise from about $4.00 to about $50.00 but that is not nearly as impressive as it first sounds.  When we compare the price appreciation in the current bull market to other bull markets we can clearly see that there is a lot of room for further upside.  The following chart illustrates other examples of bull market price performance.

Next, given the quantity of money we have seen printed around the world, we would expect to see even more of an extreme price move than what we have seen.  It is true that the price of nearly all commodities has risen significantly, but the metals have barely budged in comparison to the quantity of currency being printed.

When we consider the underperformance of precious metals mining companies relative to the metals themselves we certainly do not see signs of a “feeding frenzy mania”.  Contrary to typical action in a bubble market, the mining equities have been dismally underperforming the metals as they wait for their turn to grow in value, like Cisco Systems or Microsoft did in 1999.

In the above chart when the blue line heads up silver is outperforming mining stocks and when the blue line heads down mining stocks are outperforming silver.  Looking back as far as 1984 we can see how cheap mining equities are relative to the price of silver.  At some point this trend will reverse.

In our opinion the bull market in precious metals is far from over, which makes the mining equities very attractive when compared to the metal itself. 

Why do we want to hear others talk about the bull market being over?

We know that the best buying opportunities come when investors feel negative and very pessimistic, because if investors are pessimistic they are not investing, and if they are not investing the market is cheap.  When everyone is excited and jumping in with both feet, wet think a wise investor should be cautious and take money out of the market.  It is our expectation that a great buying opportunity in precious metals is marked with commentary about the end of a bull market.  In our view it is positive news to read stories about the end of the precious metals bull market.

Finally, we have a set of custom indicators that suggest to us that the bull market in precious metals is alive and well.  We were expecting this latest correction and we continue to monitor its progress at www.investmentscore.com.  Please visit our website to learn more about our system and to sign up for our free newsletter.

By Michael Kilback
Investmentscore.com

Investmentscore.com is the home of the Investment Scoring & Timing Newsletter. Through our custom built, Scoring and Timing Charts , we offer a one of a kind perspective on the markets.

Our newsletter service was founded on revolutionary insight yet simple principles. Our contrarian views help us remain focused on locating undervalued assets based on major macro market moves. Instead of comparing a single market to a continuously moving currency, we directly compare multiple major markets to one another. We expect this direct market to market comparison will help us locate the beginning and end of major bull markets and thereby capitalize on the largest, most profitable trades. We pride ourselves on cutting through the "noise" of popular opinion, media hype, investing myths, standard over used analysis tools and other distractions and try to offer a unique, clear perspective for investing.

Disclaimer: No content provided as part of the Investment Score Inc. information constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers, including the staff of Investment Score Inc. or their affiliates will advise you personally concerning the nature, potential, value or suitability or any particular security, portfolio of securities, transaction, investment strategy or other matter.  Investment Score Inc. its officers, directors, employees, affiliates, suppliers, advertisers and agents may or may not own precious metals investments at any given time. To the extent any of the content published as part of the Investment Score Inc. information may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Investment Score Inc. does not claim any of the information provided is complete, absolute and/or exact.  Investment Score Inc. its officers, directors, employees, affiliates, suppliers, advertisers and agents are not qualified investment advisers.   It is recommended investors conduct their own due diligence on any investment including seeking professional advice from a certified investment adviser before entering into any transaction. The performance data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that such calculations are not guaranteed by these sources, the information providers, or any other person or entity, and may not be complete.   From time to time, reference may be made in our information materials to prior articles and opinions we have provided.   These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current.  As markets change continuously, previously provided information and data may not be current and should not be relied upon.

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