Based on cyclical analysis, technical analysis, fundamental analysis, and portfolio analysis, Petrov says the bottom for gold could be in already, but most likely will be behind us within one to seven months. That’s early to mid-2014, now rapidly approaching.
Tag: silver outlook
The conclusion to be drawn is respect for the trend, clearly down. Where we have shown a positive “spin” on the character of price behavior at the current lows, that is still where price is, at the lows. One can not be bullish here by any stretch of the imagination. As to buying physical silver, we are likely looking at a price level that will not be revisited in the next few generations. Price may still go lower, to some degree, but what the Federal Reserve is doing to destroy the fiat currency and the economy makes asking the question of to buy physical or not a superfluous one.
Everyone in the world who follows silver knows the importance of $26 for silver. Until price can rally and hold above it, do not expect higher levels. There is a small 8 week base that is currently being retested by another small trading range. Whenever a trading range retests and holds above the previous one, it has a bullish connotation. Because silver is in an overall down trend, upside strength is not a dominate factor, so expect additional time required to develop a more overtly bullish character.
Six of eight significant silver market lows in the past 23 years occurred when the GSR (gold to silver ratio) was > 64 and the RSI of the GSR was < 35. Silver, in late June and early July 2013, met the above criteria, along with a near record low RSI of the GSR, and a record low in the TDI Trade Signal Line. These are strongly bullish conditions.
The only way for speculators to unwind futures short positions is by buying other contracts to offset their earlier sales. To go short they sell futures contracts, then to close these trades they buy them back. And this buying drives up silver’s futures price exactly like new long-side buying. So the massive shorts in silver futures guarantee proportional massive buying in the coming months to cover and close these bets.
The market is in a trendless phase – the downtrend has been interrupted but rather than an uptrend starting, the market is consolidating (moving sideways) with a negative or bearish bias. Without a rising copper, palladium, aluminum, tin, zinc, price it will be up to gold to bring buying into silver with those who do so focusing more on its role as a monetary metal. While talk that inflation pressures remains subdued dominates current thinking, the grey metal will underperform gold. I still like to watch copper prices to get a better sense of what silver might do.
With this editorial, we turn to the charts, ignoring the fundamentals, all the news. All we need to know has already been “priced in.” Everything else is an expectation based on news and fundamentals, and they do not always go hand-in-hand with market reality. The best example we can cite is where price expectations are/have been within the precious metals community, $50, $150, $300, and where the reality of price is, by sharp contrast, just under $20.
Both crude and silver took about 9.5 years to rally from a significant low to an important high. The high to low ratios were similar – over 13 and over 12. Both collapsed after their blow-off highs and fell 76% and 62% from their highs. Crude rallied during the next four years and is now over triple its crash low. Silver, a much smaller and more volatile market, seems likely to do something even more dramatic.
You buy insurance to protect against unlikely but possible destruction of your assets. Have you purchased silver or gold insurance against the all but inevitable destruction of your paper assets? Do you feel safer and more protected knowing that your silver and gold is physical, not paper, and stored in a secure, off-site, out of the banking system, depository?
Peter Schiff just released his new research report entitled “The Powerful Case for Silver” (pdf format). In it, he explains why the upside potential of silver is greater than the one of gold. Peter Schiff believes that the fundamentals for silver are the strongest they have ever been and that silver is massively undervalued at today’s prices.
The most common interpretation of the recent shift is that the large bank (presumably, but not directly confirmed as JP Morgan) has closed out its silver short positions (at a nice profit, no doubt), and is now positioning itself for a bullish silver reversal. This is certainly what the bank appears to be doing in the futures market, although its participation through “paper” products based on silver’s spot price, rather than on the underlying metal itself, makes it difficult to know for sure
The stage is set for the large bullion banks to profit from a rally. Expect a rally. The silver and gold markets are deeply oversold and sentiment in both markets is very low. Now is a time to buy gold and silver, not sell them. Silver and gold sentiment and indicators are at multi-year, multi-decade, or all-time lows.
In this excellent interview with FutureMoneyTrends Rick Rule looks at the current trend in gold and silver bullion and miners. In particular he answers three important questions (1) is there any relevance in the fact that gold and silver prices are falling through their cost of production (2) is the current bear market (un)usual (3) which fallacies to avoid in order to get significant returns out of mining companies in the years ahead.
This simple model, which uses only four cycles and an exponential increase, indicates that a low in the silver price was expected approximately February – July 2013, and that the next high is expected approximately March – October 2014 in the $50 – $60 range. Further, the model suggests that a silver price of $90 – $110 is possible in the September 2015 – March 2016 time period. Do not depend solely on a model such as this; it is one of many tools.
While the markets have been very volatile lately, hence difficult to predict, it is reasonable to expect a bounce in the price of gold and silver. We hasten to say that nobody can predict the future, so our expectation could turn out to be wrong. To be more precise, the probability of higher prices is higher than the probability of lower prices, at least in the short run. Here is why.