The price movement of silver since 2008 resembles the silver sentiment cycles during the 1972-1979 suggesting that we could well see $100+/ozt in the next few years.
The above introductory comments are edited excerpts from an article* by Gary Christenson (DeviantInvestor.com) entitled The Silver Sentiment Cycle.
Christenson goes on to say in further edited excerpts:
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.
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,
- traded sideways for 2 years and
- less than 3 years later it had briefly traded at $50.00, due to a combination of
- debt and deficits,
- political issues,
- conflict with the USSR,
- a market corner, and
- dollar weakness.
- then crashed to about $18.50.
In another 3 -5 years (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,
- massive “money printing,”
- inflationary expectations,
- potential hyperinflation,
- considerable fear,
- currency wars,
- counter-party risk,
- political issues,
- conflict with Russia,
- economic and dollar weakness, and
- the weakening or outright loss of the dollar’s global reserve currency status….
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…
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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