Silver Price Forecast 2014: Silver’s Ultimate Rally When Paper Assets Collapse

Silver Price Forecast 2014: Silver’s Ultimate Rally When Paper Assets Collapse

The relationship between the Dow and silver has been very consistent during the last 100 years. After each of the major Dow peaks (real, not necessarily nominal peaks), we eventually had a major bottom in silver. Below, is a 100-year inflation-adjusted Dow chart:

Silver Price forecast using the Dow

Dow’s performance during silver rallies

In September 1929, the Dow peaked in terms of US dollars as well as in terms of gold ounces (real terms). After about 1 year and 4 months, silver made a significant bottom. While the Dow continued to fall for most of the time, silver rallied until it peaked in January of 1935. At silver’s peak, the Dow was about 30% lower in real terms than what it was at silver’s bottom.

Again, in January 1966, the Dow peaked in real terms. After about 5 years and 10 months, silver made a significant bottom. While the Dow continued to fall for most of the time, silver rallied until it peaked in January of 1980. At silver’s peak, the Dow was about 55% lower than it was at silver’s bottom.

In 1999, the Dow once more peaked in real terms, and about after 2 years and 3 months, silver again made a significant bottom. However, over the period from the silver bottom to the peak in April 2011, The Dow actually went sideways (actually slightly higher). See on the following chart:

Macrotrends.org_Dow_Jones_100_Year_Historical_Chart(3)

This is just one of the reasons why I know that the April 2011 high in silver is not the peak for this bull market. Why? Silver stands in direct opposition to paper assets like stocks that are part of the Dow. Therefore, when silver has a “real deal” rally, then paper assets like the Dow will lose significant value over the same time.

This is because the debt-based monetary system does what I call a “mirror-effect”, whereby, silver (and gold) is pushed down in value, to a similar extent as to which paper assets such as general stocks are pushed up in value. When the rally of the paper assets eventually runs out of steam, then there is a big push for silver and gold.

Silver’s real deal rally will happen when people run to silver for its monetary benefits. That is not really happening yet, in a big way, but it is about to – very soon. Money is what silver is, and it is this that will drive the coming spectacular silver rally.

So, if we look at the Dow chart again (below), one can see that the silver peaks of the 70s and 30s occurred when the Dow was trading closer to the lower levels of its range. Currently, the Dow is trading at all-time high levels. If the Dow is currently having a “real deal” rally, then it means we are going to have to wait a long time before silver has its real rally.

Macrotrends.org_Dow_Jones_100_Year_Historical_Chart edited 3

However, if the Dow is just having a fake rally, then silver will spike as soon as the Dow’s fall gathers steam, and possibly peaks when the Dow hits a level indicated on the chart, as a minimum. One, therefore, has to decide whether this Dow rally is real or fake.

For more of this kind of analysis on silver and gold, and why I think that the Dow’s current rally is fake, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

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

Silver Price Forecast 2014: Monetary Collapse and Silver’s Not So Orderly Rise

Silver Price Forecast 2014: Monetary Collapse and Silver’s Not So Orderly Rise

We are about to see the end of our current international monetary system. Based on much of the evidence that I have written about previously, this appears to be a certainty. The systematic build-up of this current monetary order went together with the gradual phasing out of silver from the monetary order.

This system, by its very nature, has been diverting value away from silver. To understand this, just imagine that silver was actually used as currency (like the paper Dollar is currently used); we would then have much less silver available for sale in the current silver market. Based on the demand and supply economic model, this would then mean that the silver price would rise significantly.

The fact that silver is not held by central banks in significant quantities(or not held at all), puts it at a further disadvantage as compared with gold, in the current monetary regime. This is one of the reasons why silver is often mistakenly ignored as real money.

The rise of silver and the collapse of the monetary system is inescapably linked. Therefore, if the collapse of the monetary system is not orderly, then the rise of silver’s value will not likely be orderly. Collapse by definition suggests: to break or fall suddenly. This would suggest that when the time comes, silver will explode higher suddenly; for example, it could be possible that it rises $10, $20, $100 a day, until you can suddenly not buy it with fiat money. Interestingly, that actually means that silver and gold will reach the same price in fiat currency.

So, if you are buying physical silver to hedge against the collapse of the monetary system, you are not buying it, and looking for the price to rise to about $30 at the end of this year. No, you are expecting a sudden explosion of price, you just do not know exactly when. The approach of the silver “stackers” is therefore, the best approach, given that a monetary collapse is inevitable.

Due to the fractal nature of markets, I believe that what happened to silver during the 70’s was a prelude to this coming “end of the monetary system rally”. Silver went from $8.70 in August 1979 to $50 in January 1980. That was a phenomenal feat. Few goods (if any at all) have seen such a big increase in such a short time.

Here, I will be using the Gold/Silver ratio to illustrate how the 70s price movements for silver (and gold) is a miniature version of price movements from 1980 to 2014. Below, is a 100-year Gold/Silver ratio chart:

silver forecast with gold silver ratio

analysis of sold silver ratio chart

On the chart, I have marked two patterns with points 1 to 5. It appears to be a relevant comparison, since both patterns start from a major peak in silver, 1968 and 1980, respectively. Both patterns started at the bottom of the 100-year range of this ratio, in fact, at a major bottom (1968 & 1980).

The two patterns appear very similar – similar, but not identical. If the similarity continues, then the current pattern may complete at a point much lower than a ratio of 15. This could mean significantly higher silver prices just like it did in 1979/1980.

There are more indicators that support the likelihood of a sudden and massive spike in silver due to collapse of the monetary system.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

Hubert

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

Silver Price Forecast 2014: Significant Silver Rallies Usually Follow Major Dow Peaks

Silver Price Forecast: Silver Price Analysis, Silver Price Out Look and Silver Price Prediction 2014

Significant nominal peaks in the price of silver tend to come after significant nominal peaks in the Dow. This has been the case for the last 90 years at least.

It is no coincidence that significant silver rallies follow after significant Dow rallies end. It is simply a natural reaction to what caused the stock market rally as well as the effects of that rally. So, if it happened before, it will certainly occur again.

These stock market rallies are driven by the expansion of the money supply, causing a big increase in 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 price higher; value then flees from paper assets to safe assets such as physical gold and silver, causing massive price increases.

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

Silver and Dow rallies

Silver and Dow long term comparison

On the chart, I have indicated where the Dow/Gold ratio peaked, in 1929, 1966 and 1999. Significant silver (and gold) rallies eventually followed after all of those peaks. The rally after the 1929 Dow 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 peak, ran until 1980. In this case, the Dow’s major peak (in 1973) only came 7 years after the Dow/Gold ratio peak. Note that a big rally actually came right after the major Dow peak of 1973.

After the 1999 Dow peak, we certainly had a silver rally, which started in 2001. To date, the Dow has made a major peak only 14 years after the Dow/Gold ratio peak of 1999. The peak I am referring to, is the one of December 2013. Already we can see that there is some kind of progression as to how long Dow peaks occur after the Dow/Gold ratio peaked – first at the same time, then 7 years after and now already 14 years after.

Based on the past price action, we could have a massive silver rally when the Dow has peaked, just like it did in 1973. The question as to whether the Dow actually peaked in December 2013; therefore, becomes very important. The current similarity of the Dow and gold is a topic I am continuously dealing with in my premium service, and appears to agree with the above scenario.

If the Dow has not yet peaked, it does not mean that we will not have a silver rally. All it means is that we will have to wait a little longer. So, as I have said many times before, it is the Dow that holds the key to the future of gold and silver, at his moment.

For more on this topic, and similar analysis you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Jason Hommel Silver, Jim Sinclair Silver, Mike Maloney Silver , King News Silver, David Morgan Silver  silver price

Silver Price Forecast 2014: Silver Prices Rise Dramatically At The End – Are We Close To The End?

Silver Price Forecast: Silver Prices Rise Dramatically At The End – Are We Close To The End?

Silver or the silver price is generally much more difficult to analyze than gold. Part of the reason is that so much less is known about the specifics of the silver market. Silver analysis is often done “through” the analysis of gold. This is not completely wrong, since silver and gold mostly moves in a similar manner – they have the same monetary properties after all.

However, it must be understood that despite their similar properties, they have different monetary histories (the last 400 years at least).  These different histories have had the effect of causing silver to be scarce in a monetary form (silver suitable for pure investment demand like bullion), for example. The fact that few central banks hold silver, compared to gold, is another example of an effect that the different monetary histories had on these markets.

These and other differences affect relative price movements of gold and silver (especially with regard to timing and extent of price movement), and can often be seen on the charts. One example of such a difference that can be seen on the charts, are the fact that gold often bottoms before silver does. The current bull market started after gold bottomed in 1999, whereas silver only bottomed in 2001, for example.

These differences (divergence) can often be seen in all time frames (short-term to very long-term). However, the tendency for most people is to be aware of the short-term and maybe the medium term, but completely be ignorant of the long-term.

This kind of divergence, as you will see (later), is the reason why many look at silver and gold’s relative performance, and then make the conclusion that silver is not money, when the fact is that due to the significant distinct long-term timing; silver is at a different place than gold, on its way to be valued fairly.

I would like to illustrate that this divergence highlights why silver is such incredibly good value at the moment, and why the coming silver price rally will likely dwarf everything else. This is an aspect I have written about already.

Below, are very long-term charts of silver (top) and gold (bottom):

Long term gold vs silver

Silver Price Forecast – Silver and Gold different timing

The blue is the real price, and the red is the nominal price of silver and gold. For this analysis, we will focus on the real price. On the gold chart, the real price of gold bottomed in 1920 and in 1970, which could be described as a 50-year double-bottom. In 1935 (point 1), for the first time since the first bottom, did gold make an attempt to test the previous highs in place during the majority of the 1800s.

On the silver chart, the real price of silver bottomed in 1931 and again in 2001, which could be described as a 70-year double- bottom. That is 20 years longer than gold’s bottom, quite a massive divergence. In 1980 (point a), for the first time since the first bottom, did silver make an attempt to test the previous highs in place since the 1800s, and actually exceeded it for a while, which is typical of how silver can spike. So, silver actually technically did what gold did at least 40 years earlier – again, a massive divergence.

After the second bottom of gold in 1970, gold started a rally that ended much higher (at point 2 in 1980) than the previous highs of the 1800s. That is what rallies after valid double-bottoms normally do. Now, as I have said above, silver made the second bottom of its double bottom in 2001, and has started a rally since then. If it continues to follow what gold did, as well as what normally happens after a valid double bottom, then this rally will end much higher than the real highs of the 1800s.

Given the fact that silver has a tendency to spike much more than gold does, and what I call: “silver’s short body long tail effect”; then we should expect massively high silver prices during this coming rally. When you compare the silver chart to the gold chart, you will see how silver often rises slowly for the majority of a significant rally (short body) but will rise significantly fast at the very tail-end of the rally (long tail).

So, this is telling me that silver is actually technically where gold was in the 80s. Furthermore, the fact that silver only bottomed in 2001, whereas gold bottomed in 1970 (30 years earlier), would in some way explain why silver’s behaviour would mostly cause people to believe that it is not money – at least not like how they consider gold to be money.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Jason Hommel Silver, Jim Sinclair Silver, Mike Maloney Silver , King News Silver, David Morgan Silver silver prices

Silver Price Forecast: Massive Debt Levels Will Push Silver To $150 And Beyond

Silver Price Forecast:

The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver, has over the years diverted value from these metals, to all paper assets (such as bonds) linked to the debt-based monetary system.

The process of the devaluation of gold and silver, started by the demonetization of gold and silver, is about to reverse at a greater speed than ever before. This is similar to what happened during the late 70s, when the gold and silver price increased significantly. However, what happened in the 70’s was just a prelude to this coming rally. The 70’s was the end of a cycle, this is likely the end of a major cycle; an end of an era of the debt-based monetary system (dishonest money).

This era of dishonest money, has filled the economic world with many promises that will never be fulfilled. There will be a massive flight out of paper promises, into the ideal safe haven assets that would offer protection. In my opinion, silver will be the leading asset when this flight out of paper promises happens. This fraud started with the demonetization of silver and it will end with silver taking its place as money – the most marketable commodity.

If silver only equals the performance of the 70s, it will reach $150. However, this cycle will only be over when silver and gold are not quoted in the current fiat currencies or any other fiat currency. Instead, most goods would be quoted in terms of silver and gold.

Below, is a self-explanatory comparison of the current silver bull market and the 70s bull market:

Silver Bull Market Comparison

Silver Bull Market Comparison

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

 

Silver Price Forecast: Gold/Silver Ratio Signals Much Higher Silver Prices

Silver price Forecast 2013:

It is natural to compare the current precious metals’ bull market with that of the 70s, since there are many similarities between the two. Below is a comparison which illustrates some of the similarities between the two bull markets:

current bull market vs 70s bull market edited

all charts are generated at macrotrends.net

The top chart is gold (inflation-adjusted) from 1966 to1981, and the bottom is gold (inflation adjusted) from 1999 to 2013.  It is evident that both gold bull markets, started sometime after a major peak in the Dow/Gold ratio. They both had an important peak about nine years after the Dow/Gold ratio peak, which was followed by a significant correction.

After the peak and correction, the price eventually went higher to a far greater peak, which in the case of the 70s chart was the end of the bull market. Knowingly, or unknowingly, these similarities are probably the reasons why many think that the gold and silver bull markets ended in 2011, with the peaks in that year.

Does it mean that the bull market is indeed over, since gold and silver did not rally higher than the 2011 peaks, in 2012 and up to now in 2013? Especially since the above charts seem to suggest so.

The Gold/Silver ratio appears to provide some answers to this question. Below, is a 100-year Gold/Silver ratio chart:

Long-term Gold/Silver Ratio

Long-term Gold/Silver Ratio

On the chart, I have indicated the period of the 70s and latest bull market, between red and green lines. Notice how similar the patterns (marked a to e) are during these two periods, again illustrating how reasonable it is to compare the two bull markets. However, this chart also shows why those who believe that the bull market is over are probably very wrong.

Although, the patterns are similar, they do not exist in a similar context in relation to the long-term movements of the Gold/Silver ratio chart. The 70s pattern formed more towards the bottom of the 100-year range of this ratio, whereas the recent pattern formed more towards the top.

More importantly, the 70s pattern formed at or just after a major bottom (1968) in the ratio, whereas the recent pattern formed just after a major top. This means the 70s pattern was formed during an uptrend in the ratio, and it was, therefore, more likely that the ratio would continue higher over the years following the pattern. The recent pattern is formed during a downtrend in the ratio and; therefore, there are likely greater forces at work putting downward pressure on the ratio.

This compares favourably to the positive fundamentals of the silver (and gold) market, since there is nothing to suggest that paper (money) is now safe, and much less riskier than gold and silver. The massive debts that lurk behind the fiat currencies (including the US dollar) are representative of these great forces that will keep more people preferring gold over these debt-ridden currencies.

Point e of the 70’s pattern is where gold and silver made significant all-time nominal highs, much higher than any previous highs. On the recent pattern only gold made an all-time nominal high, higher (but not much higher) than any previous highs. Silver only equalled its 1980 all-time nominal high. This is a major non-confirmation which signals that although the two patterns played out in a similar manner, it does not mean that point e in the recent one is the end of the gold and silver bull market just like in 1980.

However, why did we not get the final blow-off rally for silver, to a price much higher than any precious nominal high? Again, it can be best explained by looking at the Gold Silver ratio. Below, is the same 100-year Gold/Silver ratio chart:

100 year Gold Silver Ratio Chart

100 year Gold Silver Ratio Chart

However, here I show a more relevant comparison to the 70s bull market (pattern). On the chart, I have marked the 70s bull market with points 1 to 5. Instead of comparing it to the latest bull market, starting in 1999, I compare it to the period starting in 1980, when silver peaked in January of that year to now (which I have market 1 to 4, with point 5 still to come). If point 5 occurs lower than 15 (as illustrated), we will have a very accurate fractal (pattern), similar to the one of the 70s (but bigger).

This is a more relevant comparison since both patterns starts from a major peak in silver, 1968 and 1980, respectively. Both patterns started at the bottom of the 100-year range of this ratio, in fact, at a major bottom (1968 & 1980).

The current pattern has not completed yet, and it would suggest that it will only complete at a point much lower than a ratio of 15. Such a completion of the pattern is consistent with the bullish fundamentals of silver (and gold) in relation to paper money – understanding that a lower ratio will likely mean higher gold and silver prices.. Furthermore, it is consistent with the scenario that we are in a downtrend in the ratio; therefore, being, more likely to go lower over the next couple of years. A recent comparison of the relationship between the silver and Dow bull markets tell the same story.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast: Using Gold to Forecast Silver’s Final Blow-Off Rally

Silver price Forecast: Using Gold to Forecast Silver’s Final Blow-Off Rally

I have previously written about how gold can be used as a leading indicator for silver. Using this principle, there is an indication that we are at or close to the period for a 1979/1980 style rally in silver. The following is a simple concept but can make for some intense reading (a lot of concentration and possibly re-reading is required). Below is gold chart from 1968 to 1975:

Gold Price Forecast - 70s gold cup

Gold Price Forecast – 70s gold cup

I have highlighted a cup formation that formed from 1969 to the end of 1971. It took about 33 months to form the cup. If one counts 33 months (the time the cup took to form) after price went higher than the peak of the cup, then one gets to the point where the final rally to the peak started.

Also, the peak came in 36 months after passing the peak of the cup.

The silver chart also formed a cup around the same time of the gold chart; however, silver’s cup was bigger. Below, is a silver chart from 1968 to 1980:

Silver Price 2013

Silver Price Forecast – Silver Cup Formation

On the chart, I have highlighted the cup that formed during the same time as the gold cup. The cup formed from 1968 to the beginning of 1973 – about 60 months. Now, suppose that it was 1978 and more than 60 months have passed since the silver price went higher than the cup’s high. If one was now (1978) to use the outcome of the gold price action after its cup formation to predict what silver could do after its cup formation, one would come to the following conclusion:

  1. 33 months (the time the cup took to form) after the gold price went higher than the peak of the cup, then one got to the point where the final rally to the peak started. Applied to silver, it means that its final rally to the peak could come soon (from that time in 1978) – and as we can see it did.
  2. 2.       The final peak in gold came sometime after the 33 months after the price went higher than the cup’s high.  It came 36 months after the price went higher than the cup’s high – that is 36/33 = 1.09 times the cup’s width. Applied to silver, it means the silver peak can come sometime after the 60 months after the price went higher than the cup’s high. It could come as early as 65.46 months after the price went higher than the cup’s high. The peak did come sometime after the 60 months after the price went higher than the cup’s high, however it was 80 months and not 65.46.
  3. 3.       The peak for gold was 17.03 times the depth of the cup, higher than the peak of the cup. The calculation is as follows: depth of the cup = 43.9 (peak of the cup) less 35 (bottom of the cup) = 8.9. Price movement from peak of the cup to ultimate peak = 195.5 (ultimate peak) less 43.9 (peak of the cup) = 151.6. That gives us 17.03 (151.6/8.9).

The silver peak could be a minimum of 17.03 times that of the depth of the silver cup plus the high of the silver cup. That would be 1.277 (2.565 (high of silver cup) less 1.288 (bottom of the silver cup) times 17.03 plus 2.565 = 24.31. The peak was not at $24.31 but at $50 – 37.145 times the depth of the cup plus the peak of the cup.

 

Using this methodology and putting it all together, it would have been reasonable to expect:

  • The final rally to silver’s peak to start after May 1978.
  • The final peak to come as early as 5.46 months after the end of May 1978 – therefore, November 1978. But this would be subject to price hitting a new all-time high or at least or close to the price predicted in point 3 above.
  • The peak to at least hit $24.31 – before or after November 1978.

The price did hit a peak in November 1978, but it was not an all-time high or anything close to the peak estimated in point 3 above. A strict application of this methodology would have meant one would have held on to December 1979 when the price went to the target of $24.31. That would have been a good return from the $5 to $5.5 price levels of 1978.

Now, that is easier done in hindsight, since the reality is a very different story. Despite missing out on silver doubling (at least) from $24, I would be happy with such an outcome. Roughly that would be like silver going to $400 from where it is now, but one only catching the move to $200. I would take that anytime it was offered, now.

From the above, you can see that it is possible to use gold’s price action to predict what the silver price could do and when. Let us now apply the above methodology to the current silver and gold situation. Below is a monthly gold chart from 2008 to 2013:

Gold price Forecast: 2008 to 2013

Gold price Forecast: 2008 to 2013

Just like for the 1970s, I have highlighted a formation (this time more of a triangle instead of a cup) that formed from the beginning of 2008 to the end of 2009. It took about 20 months to form the triangle. If one counts 20 months (the time the triangle took to form) after price went higher than the peak of the triangle, then one gets to the point where the final rally to the peak started (end of June/beginning of July 2011) – just like it was for the 70s chart.

Also, the peak came in around 22 months after price went higher than the triangle. That is relatively the same as the peak for the 70s chart. The peak for the 70s gold chart came in about 36 months after passing the peak of the cup; however, the formation is currently smaller than the 70s formation – a ratio of 20:33. So if applied to the 36 months of the 70s, we would get 21.82 (20/33 *36), which is rather close.

The silver chart also formed a triangle around the same time of the gold chart; however, silver’s triangle was bigger. Below, is a silver chart from 2006 to 2013:

Silver Price Forecast 2006 to 2013

Silver Price Forecast 2006 to 2013

On the chart, I have highlighted the triangle that formed during the same time as the silver cup. The triangle formed from 2008 to before the end of 2010 – about 31 months. Using the same methodology as we did for the 70s situation we can try to predict what the silver price might do. Unfortunately, this methodology cannot help us to determine where the bottom for this silver decline might be (but more about that later).

  1. For gold, as said above, If one counts 20 months (the time the triangle took to form) after price went higher than the peak of the triangle, then one gets to the point where the final rally to the peak started (end of June/beginning of July 2011) – just like it was for the 70s chart. So if applied to silver, it means that its final rally to the peak could come soon, since we have passed more than 31 months since the price first went higher than the top of the triangle.
  1. The final peak in gold came sometime after the 20 months after the price went higher than the triangle’s high.  It came 22 months after the price went higher than the triangle’s high – that is 22/20 = 1.1 times the triangle’s width. Applied to silver, it means the silver peak can come sometime after the 31 months after the price went higher than the triangle’s high. It could come as early as 34.1 (1.1*31) months after the price went higher than the triangle’s high. Remember this month is 33 months after passing the triangle’s peak. However, this time, based on the 70s experience, we expect the silver peak to come much later than the relative gold peak. If we apply the 70s ratio then the silver peak can come 41.33 (80/60*31) after passing the peak of the triangle.
  1. The peak for gold was 2.52 times the depth of the cup, higher than the peak of the cup. That is 888 (1921 less 1033) divided by 353 (1033 less 680). The silver peak could, therefore, be a minimum 2.52 times that of the depth of the silver cup plus the high of the silver cup. That is $53.8578 (2.52*12.89+21.375). However, this time, based on the 70s experience we can expect the silver peak to be more, relative to the gold peak. If we apply the ratio of the 70s, then the silver peak can be 5.50 (37.145/17.03* 2.52) the depth of the silver cup plus the high of the silver cup. That would be $92.27 (5.5*12.89 + 21.375)

Using this methodology and putting it all together, it would be reasonable to expect:

  • The final rally to silver’s peak to start any time now.
  • The final peak to come as early as 34.1 months after price passing the triangle’s peak – therefore, August 2013. But this would be subject to price hitting a new all-time high or at least or close to the price predicted in point 3 above. However, the 70s experience tell us that the peak might only come in much later – 41.33 months after passing the peak of the triangle. That would be February 2014.
  • The peak is to at least hit $53.8578, but based on the 70s experience it could hit at least $92.27

The reason I am presenting the above is not for the purpose of calculating a target for silver, but to have an idea of where silver is going over the next months as well as have a feel for the timing involved. The price targets are just a guide to help navigate the timing calculations. I will go into more detail about price targets in another silver and gold update.

Note that the above is an extract from my premium silver update.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service.     I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

https://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 Price Forecast: Gold and Silver Update

Silver and Gold Price Forecast 2013

Gold and Silver Rally Relative to the Dow

Since the last update, the Dow has had a rally which exceeded the previous all-time high. The rally appears to be nothing significant, since it was likely just a retest of the previous breakdown – See the Dow -chart below (from freestockcharts.com):

Dow for silver price forecast

Dow for silver price forecast

As previously stated, I believe the Dow to be the main obstacle to Gold and Silver’s major rallies. So, just as I expect the Dow to drop violently, I expect a violent rise in gold and silver at roughly the same time. This is because it is likely the same panic that causes the Dow fall that will make value to run towards gold and silver.

Also, let us not forget the bigger fractal pattern on the Dow chart (70s vs current) – charts from yahoo finance:

Dow for Silver and Gold Forecast

Dow 70s Fractal

Dow Chart for Gold Forecast

Dow current fractal

The top chart is the Dow from 1968 to 1974, and the bottom one is the Dow from 2008 to 14 June 2013. I have illustrated how these patterns are alike by marking similar points from 1 to 6. The Dow is now really stretching the possible timing for the collapse to an extreme.

In my opinion, the only thing possibly keeping the Dow from crashing now (if it is not busy crashing now), is the fact that we are not in October (its favourite peak month), yet.

Note that we are still in the period of risk aversion, as explained in my previous update, which creates the ideal conditions for the Dow to fall while gold and silver eventually rises. Gold rallies during periods of risk aversion are often the most aggressive ones. An example of a gold rally that occurred during a period of significant risk aversion was the one from July 2011 to early September 2011.

During that two-month period gold rose from $1480 to $1920 (a good 30%), while the Dow fell about 13% at the same time.

Silver and the Gold/Silver Ratio

Silver’s recent performance could be the best evidence that the current gold and silver rally could be “the real thing”. This is because silver has significantly outperformed gold since the beginning of August. We can see that from the gold/silver ratio, below – chart from stockcharts.com:

Gold Silver Ratio

Gold Silver Ratio

So, I continue to believe that continuing to exchange gold for more silver at these levels, is a move that one is extremely likely to be well rewarded for. It would make no sense to buy gold over silver, given that one expects that silver will outperform gold by a factor of at least two. That is that I expect the Gold/Silver ratio to fall to be at least lower than 30.The silver chart is also sending many positive signals. Below, is a monthly silver chart (from fxstreets.com):

Silver Price forecast 2013

Silver price forecast

The current bottom occurred during month 33 since the breakout of the top of the 2008 – 2010 triangle. Bottoms often occur on day 33 or month 33 from a bottom or a breakout. This makes it very likely that the bottom in June 2013 was the final bottom, especially since it occurred almost exactly at the breakout from the 2008 – 2010 triangle (around the $18.50 area).

If you refer to my previous premium update – section: Using gold to forecast silver (From a timing point of view) – you will find on page 8 that I concluded that silver’s final rally to its peak could start at any time (then – 25 June 2013). Also, from that same comparison, it appears that silver is fast running out of time with the current pattern as compared to the 70s pattern (but, more details on this with a next premium update).

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service .   I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast: The Dow and Gold Silver Ratio Signals Coming Silver Rally

Silver Price Forecast 2013:

The Dow and Gold Silver Ratio Signals Coming Silver Rally

The Dow, in particular, has been the biggest obstacle to a rise in precious metals, due to it sucking up most of the available value on global markets. However, it appears that this obstacle is now out of the way, with the Dow likely having peaked.

Below, is update of the fractal comparisons between the current period and the 70s, I have done for the Dow in a previous article:

Dow 70s chart

Dow current pattern

(charts from yahoo)

The top chart is the Dow from 1968 to 1974, and the bottom one is the Dow from 2008 to 14 June 2013. I have illustrated how these patterns are alike by marking similar points from 1 to 6. It appears that there is a very good chance that we have finally reached the peak for the Dow.

This is a good picture of the medium-term situation that the Dow finds itself – right before a major decline just like in 1973. In 1973, soon after the Dow peaked, gold and silver started a massive rally; therefore, it appears that then, the Dow was also an obstacle preventing a silver and gold rally. This is, therefore, an indicator that we could be close to a major spike in gold and silver, as explained in a previous article.

Gold/Silver Ratio

The gold silver ratio is also, showing strong signs that silver and gold is about to spike significantly. Below, is a gold/silver ratio chart from stockcharts.com:

gold silver ratio chart

The ratio is currently retesting the area from which it broke down when it started the spectacular rally in 2010. If this area between 67 and 70 holds, then the ratio is likely to fall significantly. Note that this ratio falls significantly mostly when silver and gold is having a rally (with silver outpacing gold of course).

Silver Chart

Below, is a silver chart from 2006 to 2013 (generated at fxstreet.com)

silver at breakout point

Silver is currently retesting its important breakout area of 2010 (similar to the gold/silver ratio). That breakout area of 2010 appears to be a critical area. If this area holds (which is very likely), then silver is likely to start a massive multi-month rally. Additional analysis is contained in my premium service.

Remember that these are massive patterns, so much patience is needed.

Conclusion

It is very unlikely that both the Dow and gold & silver are going to make new significant all-time highs from here. We, therefore, have to decide whether it is equities that will continue a bull market from here, or gold & silver.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service .     I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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