Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Netflix - FAANG a Buy, Sell or Hold?, CME Black Swans Chasing Value in Biotech Stocks - 5th Aug 21
We Will See SPX 4600 In 2021 - 5th Aug 21
Revisiting The Excess Phase Stock Market Peak Pattern - 5th Aug 21
Dramatic Divergence between US and European Stock Markets - 5th Aug 21
Budgie Clipped Wings, How Long Before Flight Feathers Grow Back After Clipping, 4 Week Update - 5th Aug 21
Lisa Su's AMD Stock Price Rockets to the Moon! $200 Target, How to Buy for Under $78 - 4th Aug 21
Gold Jumps for Joy Only to Hit the Ceiling… Hard - 4th Aug 21
Is Wise Really The King of Online Money Transfer Services? - 4th Aug 21
Tips for Investing Your Money in Stocks - The Ultimate Guide - 4th Aug 21
Gold is the Key to Financial Wisdom - 4th Aug 21
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Silver Price Sentiment Cycle

Commodities / Gold and Silver 2014 Sep 15, 2014 - 03:25 PM GMT

By: DeviantInvestor

Commodities

The following chart shows:

Silver Prices: 1972 – 1979

  •  Silver moved upward from about $1.40 in 1971, rallied to about $6.40 in March 1974, and fell to about $4.30 in August 1977.
  • The March 1974 peak took about 3 years and ended about 4.55 times its starting point.
  • The August 1977 low took another 3.5 years and fell about 33% from the peak price.

Now look at the following chart of silver prices from 2008 – 2014.

Silver Prices: 2008 – 2014

  • Silver moved upward from about $8.53 in October 2008, rallied to over $48 in April 2011, and fell slightly below $19 in September 2014.
  • The April 2011 peak took about 2.5 years and ended at about 5.7 times its starting point.
  • The correction into the September 2014 low has taken about 3.4 years and declined about 61% from its peak.

Do you see the similarities?  I have placed sentiment labels on both graphs.

Sentiment             1971 – 1977              2008 – 2014

 

Takeoff                      1.40                            $8.53

Bear Trap                  2.50                            14.70

Enthusiasm               3.50                            23.00

Euphoria                    4.50                            29.00

Greed & Delusion     6.00                            44.00

Bull Trap                    3.80                            27.50

Denial                        3.90                            26.50

Capitulation               3.80                            19.00

Despair                      4.15                            18.70

What is Different This Time?

Probably not much!  The patterns are similar, but the potential rally from present prices in 2014 looks like it could be even larger than the 1977 – 1980 rally.  Why?  See below.  In the early 1970s silver went from “ho-hum” to “enthusiasm” to “wow, who would believe it could go to $6.40?”  After the 2008 crash silver went from “going back to 5 bucks” to “enthusiasm” to “wow, who would believe it could go above $45?”

As a reminder, after silver rallied to the then astounding price of $6.40 in early 1974, it crashed back to $3.80 and then traded sideways for 2 years.  Less than 3 years later it had briefly traded at $50.00, due to a combination of inflation, debt and deficits, political issues, conflict with the USSR, fear, a market corner, and dollar weakness.

After rallying to another “unthinkable” price of nearly $50 in 2011, silver crashed to about $18.50.  However, in another 3 -5 years, perhaps in 2017 – 2019, I expect silver will have rallied to $50, $100 or maybe $300 or more, due to a combination of multiple wars, unpayable debts, inflation, deficits, bailouts, bail-ins, massive “money printing,” inflationary expectations, QE, potential hyperinflation, considerable fear, currency wars, counter-party risk, political issues, derivatives, conflict with Russia, economic and dollar weakness, and the weakening or outright loss of the dollar’s global reserve currency status.

We know that financial television (and others) expect (hope) the S&P to rally and silver to collapse, but we must remember who pays the bills for financial television, buys the advertising, and supports the various fictions in our current economic and political environment.

Along with many others, I expect that silver will rally for the next 3 – 7 years.

Favorable for Silver Prices                Unfavorable for Silver Prices

More debt and more war                            Fiscal sanity and peace

Congressional corruption                           Congressional honesty

Weaker dollar                                             Strong dollar

$10 gasoline                                              $3 gasoline

Considerable price inflation                       2% inflation

Asian gold and silver purchases               Weak demand from Asia

Ukraine and Middle-East wars                   Peace in our time

Low congressional approval ratings           High congressional approval ratings

Amateur hour in foreign policy                   Strong foreign policy

Money flow out of bonds into silver            Money flow out of silver into bonds

Money flow out of S&P                               Money flow out of silver

More restrictions on mining                        Fewer restrictions on mining

Lack of exploration for new silver               Discovery of new silver deposits

Increasing energy prices                            Decreasing energy prices

More fiscal insanity                                     A balanced budget

More “money printing”                                Back to a modified gold standard

I expect that silver will rally well over $100 in the next few years because most or all of the “favorable” and few or none of the “unfavorable” items listed above will occur.

Does this month look more like another bottom in silver and another top in the S&P, or does it look like a new paradigm with responsible leadership in the political and financial worlds, lasting employment, prosperity for all, declining debt, and a balanced government budget?

Are you buying silver instead of bonds?  Are you buying silver instead of S&P indexed funds?  Are you buying gold instead of earning 0.10% interest in your saving account? Are you preparing for a financial future based on real assets instead of paper promises secured by the integrity of politicians and bankers?

GE Christenson aka Deviant Investor

If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2014 Copyright Deviant Investor - 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.


Post Comment

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