F E AT U R E D A R T I C L E
Silver: The Next 12 Months W
hen we look at where the price of silver has gone over the last few years, it’s pretty obvious why it has been called “the restless metal” as well as
a lot of other names! It can move quietly in a fairly small range for months, and then with little warning, explode upwards. During the final portion of these up legs, which tend to last around 4 – 6 weeks, the average price increase has been between 25 and 30% (The one last year rose over 40%!). Once the final fence-sitters have been lured into taking on or adding to their position, we generally get a rolling collapse like what took place in May of 2011 – and which seems to be continuing this year as we head into summer. When one of these downdrafts gets underway, it’s difficult to stay onboard the silver bull. Whether the price tops due to a margin increase, a lack of new buyers, or “market manipulation” it definitely puts a crimp in the style of those on the long (wrong?) side. All sorts of predictions start coming out of the woodwork from the main stream news talking heads about how “this bull market is definitely over”. It makes you feel like asking some of them just how much silver they have ever owned.
Two Steps Forward, One Step Back
breaking one or more obvious chart “support” levels for a few days. When everyone has become sufficiently bearish, the price bounces back for awhile and then goes into a protracted sideways movement. Over time, this sandpaper action wears away many of the hardy souls who were not initially shaken out of their position on the way down. After building a solid foundation well off the post-collapse lows, silver then proceeds to claw its way back up the technical hill, challenging and eventually surpassing its previous peak. The process tends to last about two years, give or take. We saw this behavior play out from the highs achieved in 2004, 2006, and 2008. (The notable exception was 2010, when silver made a new bull market high above $22, and then ran to almost $50 without looking back – proving that holding a core position at all times not only makes sense, but dollars as well.) So, referring to this generally reliable historical pattern for guidance, it is reasonable to consider that a new silver price high eclipsing the May 2011 level can be expected to take place sometime in early to mid-2013.
Pay Attention to $50 Silver
n By David Morgan
38
Micro-Cap Review Magazine
If you take time to analyze these periodic silver swings, a rough pattern emerges. Shortly after an important new high takes place, the price falls away sharply in a series of medium term (several months) down legs until
Furthermore, once the $50 level is decisively penetrated with several strong closes into new (nominal) all-time high ground, it would not be the least bit surprising to see
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