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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

This Needs To Happen Before Silver Really Takes Off

Commodities / Gold & Silver 2019 Jul 17, 2019 - 08:06 AM GMT

By: Hubert_Moolman

Commodities

Significant nominal peaks in the price of silver tend to come after significant nominal peaks in the Dow as well as Dow/Gold ratio peaks. This has been the case for the last 90 years at least. This is mainly due to the special relationship between silver, the stock markets and debt.

These stock market rallies are driven by the expansion of the money supply (debt), causing a big increase in the value of paper assets (including stocks) relative to real assets. When the increase in credit or the money supply has run its course, and is unable to drive paper prices higher; value then flees from paper assets to safe assets such as physical gold and silver, causing massive price increase.


Although silver has a component that benefits from the increase in money supply or credit, it is in no way as effective as its monetary component that benefits enormously when credit deflates.

Below is a 100-year inflation-adjusted silver and gold chart (generated at macrotrends.net):

Dow/Gold Ratio Peaks
On the chart, I have indicated where the Dow/Gold ratio peaked, in 1929, 1966 and 1999. Significant silver (and gold) rallies and peaks eventually followed after all of those Dow/Gold peaks.

The rally after the 1929 Dow/Gold peak, ran until 1934. It is important to know that the Dow also peaked when the Dow/Gold ratio peaked in 1929.

The silver rally after the 1966 Dow/Gold peak, ran until 1968. After the 1999 Dow/Gold peak, we had a silver rally, which started in 2001and ran until 2011.

Major Nominal Dow Peaks

On the chart, I have also indicated Major Dow Peaks. This is where the real silver action comes in, since Major Dow peaks are followed by Major Silver Peaks.

The Dow made a major nominal peak in 1973, about 7 years after the Dow/Gold ratio peak. Note that a big rally actually came right after the Major Dow Peak of 1973, and ran until 1980. This was significantly longer than the rally after Dow/Gold ratio peak.

The 2011 silver peak was not a Major Silver Peak, simply because it basically only equaled the 1980 Major Silver Peak . A Major Silver Peak will reach multiples of the 1980 peak, so it is still coming.

We are now still awaiting our next Major Silver Peak, but first we need a Major Dow Peak. The bottom for silver has been in for a couple of years already, so it has been a phase of accumulation for years already.

The Major Dow Peak will likely come soon as the silver price rises , until it will suddenly accelerate as the credit woes creates all kinds of panic. The credit woes are in the works. Just look at the Gold/Silver ratio. It is near all-time highs (only reached trice in the last 100 years).

What is significant about this peak-level in the Gold/Silver ratio is the fact that it is so close, and follows the 2016 bottom in interest rates. These confirm that some very serious credit woes are coming. It is likely on a scale not seen over the last 100 years.

We can expect a rush for real monetary assets as never seen before. This will put silver again at the forefront of money and monetary solutions.

For more on this, and similar analysis you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

Warm regards,

Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

© 2019 Copyright Hubert Moolman - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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