Silver Price Forecast: Silver Market Update

Silver Price Forecast: Silver Market Update

Silver is currently trading at key resistance levels. See below, a six-year silver chart (all charts generated at fxstreet.com):

silver long-term chart

On the chart, I have drawn a significant upward sloping resistance line (red line). Silver has now reached that line, trying to breach it and stay above it. It has also reached the top resistance line of a big flag pattern. If the silver price gets through these resistance lines, and stays above them, then it is likely to continue its rise, but likely in a more accelerated manner.

These resistance areas can be very tricky. Price can often react in a violent manner downwards; however, there are no certainties.

What silver will do at these resistance areas is a short-term problem. From a longer point of view, it is clear to me that silver is going much higher. Eventually, it will successfully break out of the big flag and spike upwards past the $50 level.

In a previous article, I have shown how closely silver is following a past pattern on the gold chart. That comparison also suggests that the silver price will eventually successfully breach the resistance lines indicated above. Below, is the chart from that comparison:

silver vs gold

On the charts (silver is the top one and gold is the bottom one, I have marked the two patterns (1 to 5) that are similar on the gold and silver chart. For more details and explanation of the two patterns, please read that full article. If the silver pattern continues to follow the gold pattern, then the silver price would pass the resistance lines indicated in the first chart, and eventually challenge the $50 level.

For more of this kind of analysis, see my Long-term Silver Fractal Analysis Report ,or subscribe to my premium service .

Hubert

http://hubertmoolman.wordpress.com

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

Silver And Gold Market Price Forecast: Buying Silver Is Like Buying Gold At $554 Today

Silver and Gold Market Price Forecast

I think that buying silver today is like buying gold for $554 an ounce. Let me explain: As I am writing, silver is currently trading at about 65.2% (32.6/50) of its 1980 high. If gold was trading at 65.2% of its 1980 high, it would be trading at $554 (0.652*850).

Now, I really like gold, even at today’s price of $1 738, but why should I pay $1 738, if I can get it for $554 by buying silver and then exchanging it for gold when the gold/silver ratio is at an extreme (in favour of silver). The reason for this logic comes from the fundamental relationship between gold and silver as explained in my previous article.

For my argument to be valid, silver has to outperform gold over my investment period, and at least equal gold’s performance relative to its 1980 high. That is, for example, if gold reaches five multiples of its 1980 high ($4250), then silver should do the same ($250), in this example, giving us a gold/silver ratio of 17.

Now, if silver outperforms gold, then that means that the gold/silver ratio should decline over my investment term. In my previous article called: Why Silver for a Monetary Collapse, I analysed the gold/silver ratio from a very long perspective (200 years). Here I would like to take a slightly more short-term view (40 years).

Below, is a long +/- 40 year chart of the gold/silver ratio:

On the chart, I have identified two fractals, which I have both marked with points 1 to 3. The two patterns are visually very similar. I have indicated two option of where we could be currently (on the current pattern), compared to the 70s pattern. The ratio appears to be at a major crossroads, ready to make a big move, up or down. This could mean that a massive move in the gold and silver price is due shortly.

Based on the patterns, if it moves up, it would likely signal the end of the precious metals bull market, similar to January 1980. A move down would be an acceleration of the current bull market in gold and silver, similar to August/September 1979.

The question is therefore: Do you think the bull market in precious metals is over? Before you answer that, first consider the following:

On the above graphic, the top chart is the current gold bull market from 1999 to date, compared to the bull market of the 60s and 70s, the bottom chart. The previous bull market in gold was about 14 years long, from a peak in the Dow/gold ratio to the bottom in Dow/gold ratio. The current bull market is 12 years, from the peak in the Dow/gold ratio to date.

The previous bull market ended with a parabolic move in gold (on the above scale). The current bull market has not made a parabolic move (on the above scale); in fact, it has been rising steadily over the last 12 years.

To me, these two charts suggest that we are more likely to have a parabolic rise in the gold price, than being at the end of this bull market. Therefore, it also suggests that price action for gold and silver, and the gold/silver ratio is likely to be more like 1978/1979 than like January 1980.

So, back to my argument of buying silver, in order to get gold at $554: I certainly think that silver will outperform gold over the remaining part of this bull market in precious metals, as well as, at least equal gold’s performance relative to its 1980 high. I can certainly see how gold could be at $4250 with silver being at $250, or at higher prices, with the gold/silver ratio being at 17 or less.

For more analysis on silver and gold, you are welcome to subscribe to my free or premium service.

Warm regards and God bless,

Hubert

http://hubertmoolman.wordpress.com/

hubert@hgmandassociates.co.za

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

Silver Price Forecast Video : Silver Is The ideal Asset For A Monetary Collapse part 2

Silver Price Forecast: Silver During A Monetary Collapse

Please subscribe to my premium or free service (subscribe on the side bar by entering email address) for regular updates. For more detailed silver analysis you can purchase my Silver Fractal Analysis Report.

Warm regards and God bless,

Hubert

Silver Price Forecast Video : Silver Is The ideal Asset For A Monetary Collapse

Silver Price Forecast: Silver During A Monetary Collapse

Please subscribe to my premium or free service (subscribe on the side bar by entering email address) for regular updates. For more detailed silver analysis you can purchase my Silver Fractal Analysis Report.

Warm regards and God bless,

Hubert

http://hubertmoolman.wordpress.com/

hubert@hgmandassociates.co.za

Silver vs Nasdaq (Silver Price Forecast 2012): A response to Mr Erik Swarts

Silver Price Forecast 2012:

I recently read an article by Mr Erik Swarts, which I found very interesting. I enjoy reading his articles, since he often identifies fractals on financial charts, in order to forecast, what may or may not happen. This is exactly what I specialize in.

In this particular article, he compares silver with the NASDAQ, and states:

To further color what I perceived to be the unbridled risk appetite within the silver market, I contrasted silver with the parabolic rise and break of the Nasdaq market in 2000. Interestingly, both markets have traded very similar, both through the parabolic rise and breakdown, when contrasted with the relative strength of their closest cousins – the SPX for the NDX and GLD with SLV

Specifically in that article (and the related articles), he compares the April 2011 peak in silver, with that of the Nasdaq in 2000. The correlation between the two patterns has been quite accurate thus far. However, I am of the view that this correlation will not continue; it is about to diverge significantly. This is why:

On financial charts, a particular pattern can often repeat itself, on the same chart, as well as on the chart of another good. Often, two patterns correlate for some time, but then it can suddenly diverge. Whether two patterns will continue their correlation or diverge, depends on many things.

One of the important things that I look at is the context in which the two patterns exist. If the context in which they exist are similar, then it is very likely that the correlation between the two patterns will continue, and vice versa.

When considering the context, one also has to look at the relevant time frame. If the relevant conditions surrounding both patterns, exist in similar time frames, or span over similar time frames, it increases the likelihood of the two patterns continuing the correlation.

The top in the Nasdaq in 2000, came at a time when the stocks were significantly overvalued compared to real assets. In fact, it was at all-time highs. This is because the Dow/gold ratio peaked in 1999, at about 44, and was still close to 40 when the NASDAQ peaked.

I do not believe silver was overvalued on a historical basis (on a short-term basis it might have been). It was only at its 1980 all-time nominal high, and still below the inflation adjusted high. The gold/silver ratio might have been at a recent low (it was at 32), but that is not an all-time low. In fact, the long-term mean (200 years and more) is lower. So, in terms of gold, silver was not at an extreme level, it was in fact undervalued.

The top in the Nasdaq was an all-time high, with no other peak coming close to it. As said before, the peak in silver was only at the 1980 all-time nominal high. So, the structures of the two charts are very different from a long-term perspective; therefore, the two peaks are very different from a long- term perspective. The macro view takes precedence over the short-term view, and in this case, the macro view, suggests that the pattern of silver should diverge from the Nasdaq pattern.

To illustrate that the macro view suggests that the path for silver is likely up, and not down from here, I have prepared the following chart that compares silver to the Dow:

The top is silver, and the bottom is the Dow. In order to put the two charts in similar context, I have looked for certain markers, and matched the charts accordingly. In 1980, the Dow made a bottom, as measured in gold and silver. For silver, a similar bottom would be when the Dow/silver ratio peaked. For both charts, these points, respectively, were at significant lows for each.

Using the Dow/gold and Dow/silver ratio as a marker is important, since it gives us a proper context. It gives us what a Dow/dollar ratio is not able to give us, since it is an unreliable measure, due to the nature of fiat money.

I have marked the points that I perceive to be similar (1 to 4). It is interesting to note that point 1, on both charts, came about 7 years after the Dow/silver ratio bottomed/peaked. Based on this comparison, we are at a point just above point 4, on the silver chart, relative to the Dow chart. If the silver pattern continues to follow the Dow pattern, we could test the $50 level soon, and could make new all-time highs over the coming years.

Also, it does not mean that I do not expect the markets to be in for a rough ride over the coming months. In fact, I expect a significantly rough ride for the stock markets; it is just that I expect silver to move up, counter to the direction of the general markets.

For more silver analysis, visit my video channel. Also, you can subscribe to my premium service here.

Respectfully,

Hubert Moolman

http://hubertmoolman.wordpress.com/

Silver and Gold, Different Steps But Same Dance

It is well established that there is a high correlation between how the price of gold and silver trades. Thanks to this relationship between gold and silver, one is able to use historical trading data of the one good, in order to project what may happen to the price of the other.

Awhile back, I wrote about this in my newsletter:

Do not listen to those who call silver a bubble! It is very likely that, believing them, you will miss out on the greatest silver rally in recent times. Now, I cannot tell you for sure that silver or gold is going to rally from here – nobody can. What I do tell you is that all the signs that I look at are indicating that silver and gold will rally significantly from around this area.

Silver compared to gold

Let’s compare silver’s attack of its 1980 all-time high to that of gold. I believe this to be a justified comparison due to the fact that silver and gold’s prices have such a high correlation; but despite that they have a high correlation, they sometimes reach similar milestones at different times. Let me explain by way of the following chart:

Chart generated at commoditycharts.com

The green is silver and the black is gold. I have marked a similar peak for silver and gold as 1 and another as 2. Notice how at one time gold and silver pass their similar peaks at the same time, and at another time they pass it separately. But even on the occasion that they passed their peaks at different times, the manner in which the peaks were passed were still very similar.

I have also indicated where gold bottomed but silver did not. Silver instead bottomed at about 1993. Again, despite the fact that silver and gold bottomed at different times, their manner or pattern of bottoming was still very similar.

So, there is not just a similarity in how gold and silver trade at the same time period, but also how they trade at similar milestones, despite the fact that those milestones are sometimes reached at different times. This can cause silver or gold to be the leading indicator, depending on the particular milestone. In this case (milestone of reaching the 1980 peak), gold is undoubtedly the leading indicator, so it could help us to project what silver might do around this milestone.

I have previously made my view clear regarding where I think silver is in this bull market. I have noted that silver has formed a cup — in a similar manner as gold did — when it reached the $50 mark. I consider the pullback to the $32 area (about 1/3 retracement of depth of cup) as normal; therefore, I consider the probability of silver going lower than the $32 level as highly unlikely.

Let us see if gold’s behaviour, when reaching its (relative) 1980 high in 2007, can help us to predict what silver will do going forward.

In the chart above, you can see that gold made a triangle-type pattern just before it reached the 1980 all-time high. When it came out of that triangle pattern, it rallied strongly to the 1980 high, which started the formation of a flag-type pattern. From the flag pattern, price shot upward to the $1000 level. It is also worthy to note that point 4 of that flag pattern represents about the halfway point from point 3 to the eventual top ($1000).

Above, you can see that silver also made a big triangle-type pattern before it reached the 1980 peak. When it came out of the triangle, it rallied very strongly to the 1980 peak. At the peak it fell down to the $32 area. Is it currently forming a flag or similar pattern, just like gold did? I certainly believe so. I believe if price goes through the $42 level, it will confirm that silver is going to go back to $50 and soon blast through it, just like gold did through its 1980 peak. A fall below point 5, and all bets are off. However, I believe this possibility to be unlikely.

If we assume that silver does go through the $50 level, what target can we expect? If we use gold’s performance to establish a target for silver, it would appear that $80 would be a minimum. I think it will be much more.”

Currently, silver appears to be at the end of a flag-type pattern, just like gold’s at the end of 2007 (see above); so, it appears the correlation as explained above is still on track. Silver is about to take the lead in this precious metals bull market.

For  more detailed analysis on silver, see my Silver Fractal Analysis Report.

Warm regards and God Bless,

Hubert

Visit my Youtube Channel for my video updates on gold and silver

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