Silver jumped out of the gate to begin 2010 with a flying start. It climbed a remarkable 9.7% in this year’s first week of trading to end the week at $18.45. From its $8.79 low barely fourteen months ago after the de-leveraging and mass liquidation of assets resulting from the Lehman Brothers collapse, silver has climbed an astounding 110%. But the upside fireworks have hardly begun.
I believe there exists the real possibility of a short squeeze in silver this year or in 2011. That short squeeze will propel silver to – and probably over – its January 1980 record high of $50 per ounce. That event will mark an important step in silver’s bull market. Everything that has occurred in silver over the last thirty years is simply base-building, as can be seen in the following chart.
The base-building is marked by the two long-term gold lines that look like a “huge smile,” as one of my readers remarked.
From 1980 to the 1991 low, silver was being ‘distributed’. In other words, silver sellers were more aggressive than silver buyers. Eventually, those circumstances changed, and silver’s price stopped falling. The so-called smart money started recognizing silver’s extraordinary undervaluation. Buying power began to exceed selling pressure. Its price began to rise and has been working its way higher ever since. Silver has been rising this decade within the uptrend channel marked by the two [red] parallel lines.
Silver’s rise from $3.51 in February 1991 to $18.45 at present – approximately a 9.1% annual rate of appreciation over this 19-year period – pales in comparison to what lies ahead. Silver is still in stage-1 of its bull market; the big price gains don’t start occurring until widespread participation by the public begins in stage-2, but that will not begin until silver breaks out of its base when $50 is eventually hurdled. With that event silver will start garnering worldwide attention just like gold started doing when gold entered stage-2 of its bull market by hurdling above $1,000.
The speculative stage-3 for silver, which will be marked by extraordinary price gains like those of silver’s last stage-3 in 1979-1980, is still far in the future.
James Turk is founder and chairman of GoldMoney, which provides a convenient and economical way to buy and sell gold, silver and platinum online using the digital gold currency for which he was awarded four US patents. He has specialized in international banking, finance and investments since graduating in 1969 from George Washington University with a B.A. degree in International Economics. He began his business career with The Chase Manhattan Bank (now J.P. Morgan Chase), which included assignments in Thailand, the Philippines and Hong Kong. In 1980 he joined the private investment and trading company of a prominent precious metals trader. He moved to the United Arab Emirates in December 1983 to be appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority, a position he held until resigning in 1987 to begin FGMR.
James Turk has written several monographs on money and banking and is the co-author of The Coming Collapse of the Dollar (Doubleday, 2004), now available in a paperback version entitled The Collapse of the Dollar.
Pingback: jalia parsnip
Pingback: mark mania
Rejoice! What was perhaps the freest market in the entire world is now ended. Crushed. Wiped out by the swift hand of the state. Wait... That's NOT a good thing? (Sigh)... Oh well. It was fun while it lasted. Dominic Frisby explains why the shutdown of the Silk Road is such a travesty. Read on...
There is one chart, just one chart, that market analysts and gold bugs alike could learn a lot from. It displays clearly the ebb and flow of one critically important trend, where it's headed through the end of the year, and how you can use it to your advantage. Greg Guenthner explains...
China's push towards a more market-based economy could kick into high-gear, as recently proposed economic reforms are some of the country's most radical policy changes in over three decades. But what will that mean for foreign investors and how could it shape the global economy? Frank Holmes takes a closer look...
Today, Ray tells you how to profit from curing cancer.
The US in the midst of an energy revolution, but it hasn't come easily. It's been a long time in the making, and the only reason it's happening is because of technological breakthroughs in oil production. Today, Ray Blanco explains why the next step in this energy revolution is improving seismic technology. Read on...
Former Fed Chairman Alan Greenspan was asked recently on Bloomberg TV and scoffed at Bitcoin.