Silver Low – Probably

In sum: Unfortunately, there is not, that I can see, a simple pattern that predicts the next low in the price of silver.  Markets seldom make it that easy.  However, there are patterns that provide valuable information to help illuminate the “big picture” perspective of where the current price of silver lies in the up-down-up-down cycle of prices.

PROCESS

  • Examine monthly prices since 1972 – over 40 years (see graph below).  Use monthly prices to see only the “big picture” with important lows and highs.
  • List the dates for important lows and determine the number of months between adjacent lows.
  • Look for simple patterns.
  • Group One Lows:  8/77, 6/82, 5/86, 2/91, 3/95, 8/98, 5/04, 10/08, 4/13.  They are separated by the following number of months: 58, 47, 57, 49, 41, 69, 53, 54. (average 53.5 – about 4.5 years)
  • Group Two Lows:  2/93, 7/97, 11/01, and they are separated by 53 and 52 months.

Significant lows are separated by approximately 4.5 years, with rather wide variations.  I doubt you can trade this, but if you are investing for the long term, this indicates that buying aggressively approximately every four to five years should work out fairly well.  The April of 2013 silver price looks like it is at or near a multi-year low.

silver_price_chart_1970-2013

Big Picture Summary

  • Governments spend in excess of their revenues and create ever increasing debts.
  • Central banks create the digital currency to keep the debt machines running, thereby increasing the money supply and inevitably increasing prices.
  • Silver prices fall until there are few sellers left, rise until there are few buyers remaining, and repeat the cycle.  High Frequency Trading exaggerates the highs and lows.
  • Each low-high-low cycle takes roughly 4.5 years.  At price peaks the silver bulls are euphoric, while they are depressed and worried at the lows.
  • Ask yourself, “Does now feel like a low or a high in the silver price?”
  • About 4.5 years ago there was an important low in the silver price – October 2008.
  • About 4.5 years before that, there was another important low in the silver price – May 2004.
  • Highs follow lows.

For additional information read Silver – A Bipolar Roller Coaster

GE Christenson | The Deviant Investor

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