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Something BIG Is About To Happen In Silver – Here’s Why

edsl48

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#1
…Something big is happening in silver, and it’s best if gold bugs don’t miss it by paying too much attention to gold.

…I believe silver is at the very beginning of a historic rally that should take it to all time highs in the triple digits. The rally should be fast and furious as were the previous two in 1980 and 2011, my guess taking about 2 years or less this time.

…Let’s look at the last two major silver rallies and how they unfolded, to give us a hint about how this next one could unfold.

The 1978-1980 bull market in silver was like an approaching storm climaxed by a tornado. Here’s what it looked like, relative to gold, from beginning to end:



…Here’s a zoom-in on the first 16 months so you can better see what happened.

For most of 1978 until October, gold actually outpaced silver by about 100%. By February, silver overtook gold, and by the end of August, silver began to pull away. Then for the next five months, silver went totally berserk.



Something similar happened from the 2008 financial crisis bottom on precious metals on October 31, 2008 until the silver peak in April 2011. Here’s the full chart of that run.



From October 2008 until around August 2010, the two metals traded mostly evenly. Silver outpaced gold on occasion, but corrected back down towards it repeatedly during that time.

Around the end of August 2010 though, silver began to pull away with complete abandon.



This is how silver tends to outperform gold. The bulk of the out-performance happens at the end of a bull rally, not throughout. Since gold bottomed in late 2015 though at $1,044, silver has not confirmed. If March 16, 2020 was the bear market bottom in silver, then we may now be entering the initial stages of the real gold bull rally that should be led by silver.

Here’s where we are now, counting March 16 as the equivalent of the post 2008 financial crisis precious metals lows on October 31, 2008:



It looks like silver may be already pulling away from gold. If, during the next gold correction, silver doesn’t fall hard, we may be much nearer the parabolic stages than we were in the last two rallies.

Technical Indicators Pointing to Something Big Brewing

…On the short-term daily chart, the 50 day moving average in silver just moved above the 200DMA. This could be a nice sign for technical short-term traders who may have their algorithms pinging at them that something is happening in silver. See red circle at the right.



This by itself isn’t much, and doesn’t point to anything long term. However, something much more significant is happening on the long-term chart.



From the above silver chart, we see:

  • the 50 week moving average (blue line) first fell below the 200WMA way back in the summer of 2013.
  • From that point until the end of the gold bear market in late 2015, the 50WMA acted as resistance for silver.
  • You can see that from 2013 until 2016 price just could not get above that blue line.
  • Then the new bull market in gold began, but this new bull market in gold was never confirmed by silver.
  • After the initial stages of the gold bull market from December 2015 to July 2016, silver indeed broke out but once it hit the 200WMA, that red line began acting as major resistance.
  • The final historic washout for silver was in March during the COVID-19 liquidity crunch, which we can count as the actual bear market bottom for a bear market that has lasted 9 years.
Here’s what may be the really big deal: On the long-term chart above [below] you can also see that:

  • the 50WMA has just broken decisively above the 200WMA for the first time since October 2003 (excluding a very brief dip and break back above in 2009 post financial crisis.)
  • From that point in 2003 over the next 7 and a half years, silver skyrocketed 10x, an order of magnitude.
  • That can, and I believe will, happen again, with the starting point being this month, July 2020.


…Something else also happened in March, another historic record in silver.

  • Relative to the US M2 money supply, the price of silver is coming off all time lows also not seen since 2003. If silver does nothing but stay where it is in money supply terms, it will still rise significantly. Money supply is not going to stop rising any time soon, not with the Fed printing as much as it is.


Physical Demand Rising

This impending rally is being confirmed, I believe, by the physical markets. I don’t believe the backwardation we saw in the silver market the morning of July 9, 2020 is a coincidence. Deliveries from the Comex are also hitting records. See the July Comex delivery report here for silver, screenshot below. Keep in mind that July is only a third of the way done.



Here’s the silver backwardation already happening, with timestamps. Notice spot price is above the August contract. This indicates high demand for physical delivery.



Conclusion

  • If silver could make a 10x run from 2003 to 2011, I believe it can make another 10x run from $11 to $110, but much faster this time, to keep pace with the expanding money supply.
  • If silver really is in a bull market, then it should go above $50, as that was the 1980 top as well, and approach the 15:1 gold to silver ratio that is closer to historic norms.
If we count by tops, silver has been in a bear market for 30 years now. I believe silver is about to finally break out, in a big way, way past all time record highs in dollar terms.
 

d-lod

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#2
It's true that SILVER lead 1979-80 rally but the real reason was not appreciating silver as declining natural resources but reason was:

Sure, back in 1980, Bunker, his younger brother Herbert, and other members of the Hunt clan owned roughly two-thirds of all the privately held silver on earth. But the historic stockpiling of bullion hadn’t been a ploy to manipulate the market, they and their sizable legal team would insist in the following years. Instead, it was a strategy to hedge against the voracious inflation of the 1970s—a monumental bet against the U.S. dollar.
 

andial

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#3
Substantial article, get out the way silver's time is now.
 

d-lod

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#4
It's true that SILVER lead 1979-80 rally but the real reason was not appreciating silver as declining natural resources but reason was:

https://en.wikipedia.org/wiki/Silver_Thursday

Background[edit]
Nelson Bunker Hunt, Lamar Hunt, and William Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt, Jr., had for some time been attempting to corner the market in silver. In 1979, the price for silver (based on the London Fix) jumped from $6.08 per troy ounce ($0.195/g) on January 1, 1979, to a record high of $49.45 per troy ounce ($1.590/g) on January 18, 1980, an increase of 713%. The brothers were estimated to hold one third of the entire world supply of silver (other than that held by governments). The situation for other prospective purchasers of silver was so dire that on March 26, 1980, the jeweller Tiffany's took out a full page ad in The New York Times, condemning the Hunt Brothers and stating "We think it is unconscionable for anyone to hoard several billion, yes billion, dollars' worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver".[1]

But on January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and, as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets.

Climax[edit]
The Hunt brothers had invested heavily in futures contracts through several brokers, including the brokerage firm Bache Halsey Stuart Shields, later Prudential-Bache Securities and Prudential Securities. When the price of silver dropped below their minimum margin requirement, they were issued a margin call for $100 million. The Hunts were unable to meet the margin call, and, with the brothers facing a potential $1.7 billion loss, the ensuing panic was felt in the financial markets in general, as well as commodities and futures. Many government officials feared that if the Hunts were unable to meet their debts, some large Wall Street brokerage firms and banks might collapse.[2]

To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay Bache which, in turn, survived the ordeal. The U.S. Securities and Exchange Commission (SEC) later launched an investigation into the Hunt brothers, who had failed to disclose that they in fact held a 6.5% stake in Bache.[3]

Stock market reaction[edit]
This day marked the end of a large stock market correction that year.

Aftermath[edit]
The Hunts lost over a billion dollars through this incident, but the family fortunes survived. They pledged most of their assets, including their stake in Placid Oil, as collateral for the rescue loan package they obtained. However, the value of their assets (mainly holdings in oil, sugar, and real estate) declined steadily during the 1980s, and their estimated net wealth declined from $5 billion in 1980 to less than $1 billion in 1988.[4]

In 1988, the brothers were found responsible for civil charges of conspiracy to corner the market in silver. They were ordered to pay $134 million in compensation to a Peruvian mineral company that had lost money as a result of their actions. This forced the brothers to declare bankruptcy, in one of the biggest such filings in Texas history.[5]
 

D-FENZ

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#5
I pretty much chalk up articles like the one in the OP as little more than chewing gum for the mind. No offense intended- it's just a time-worn, learned response. If I had a '63 dime for every time I read one like it I'd be a wealthy man. In fact, long, well written, widely circulated articles just as often as not serve as a contrarian indicator and a prelude to a massive price dump.

Haven't lost my faith in silver at these GSR levels- not even close- but the price action is the only thing that gets my attention.
 

the_shootist

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#6
I pretty much chalk up articles like the one in the OP as little more than chewing gum for the mind. No offense intended- it's just a time-worn, learned response. If I had a '63 dime for every time I read one like it I'd be a wealthy man. In fact, long, well written, widely circulated articles just as often as not serve as a contrarian indicator and a prelude to a massive price dump.

Haven't lost my faith in silver at these GSR levels- not even close- but the price action is the only thing that gets my attention.
same
 

newmisty

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#7

gringott

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Violating my rule if everybody thinks it, it is probably wrong,

#MEETOO
 

newmisty

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#10
To da moon!

 

GOLDBRIX

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#11
I pretty much chalk up articles like the one in the OP as little more than chewing gum for the mind. No offense intended- it's just a time-worn, learned response. If I had a '63 dime for every time I read one like it I'd be a wealthy man. In fact, long, well written, widely circulated articles just as often as not serve as a contrarian indicator and a prelude to a massive price dump.

Haven't lost my faith in silver at these GSR levels- not even close- but the price action is the only thing that gets my attention.
You got to remember there are neophytes ,here not too many, in PMs around the world. Many were not born yet in the time of the Hunt Bros.
I lived it. My grandmother had me bring all of her utensils and metal wear to her and we went through culling out all the sterling. She had me take it to a dealer to cash out. My grand parents held onto the silver dollars my grandfather pulled from cash registers. ( That is a story that has been told here before).

Teaching and Learning should be a constant venture. Obviously I have no problem with stories from the past.
Live and Learn.
 

newmisty

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#12
You got to remember there are neophytes ,here not too many, in PMs around the world. Many were not born yet in the time of the Hunt Bros.
I lived it. My grandmother had me bring all of her utensils and metal wear to her and we went through culling out all the sterling. She had me take it to a dealer to cash out. My grand parents held onto the silver dollars my grandfather pulled from cash registers. ( That is a story that has been told here before).

Teaching and Learning should be a constant venture. Obviously I have no problem with stories from the past.
Live and Learn.
I was just entering kindergarten.
 

edsl48

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#13
You got to remember there are neophytes ,here not too many, in PMs around the world. Many were not born yet in the time of the Hunt Bros.
I lived it. My grandmother had me bring all of her utensils and metal wear to her and we went through culling out all the sterling. She had me take it to a dealer to cash out. My grand parents held onto the silver dollars my grandfather pulled from cash registers. ( That is a story that has been told here before).

Teaching and Learning should be a constant venture. Obviously I have no problem with stories from the past.
Live and Learn.
Back in the day before even my time the Southerners would bury there silver serving pieces and flatware to hide them from the advancing soldiers in Sherman's army as it marched to the sea. Burying silver to hide from government confiscation is nothing new.
 

edsl48

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#14
Silver: poor man’s gold no more?
Published: Aug. 1, 2020 at 8:11 a.m. ET
By
Myra P. Saefong
39
Prices for the metal trade 25% higher for July

Silver futures settled at a 7-year high on July 27
AFP/GETTY IMAGES


Investors have focused on a rise in record prices for gold, but silver’s up about 25% in July—the metal’s second-biggest monthly gain on record—and it’s still undervalued compared with the yellow metal.
“Silver is often called the ‘poor man’s gold’ because some of the same factors that cause gold prices to rise do the same thing to silver prices,” says Ed Moy, chief market strategist at gold retailer Valaurum. “And what is driving gold prices now are mainly the fear of inflation due to the magnitude of the monetary and fiscal stimulus worldwide, and the flight to safety due to the uncertainty around how and when the global economy will recover.”
Silver, however, is “cheaper per ounce” than gold, and its prices are much more volatile, he says. It has also been “lagging behind gold’s rise” and the ratio of the number of ounces of silver to buy one ounce of gold is historically high, implying that either “gold is overpriced or silver is underpriced.”
If silver is underpriced, ‘there is a lot of money to be made.’
— Ed Moy, Valaurum
If silver is underpriced, “there is a lot of money to be made,” says Moy, who was director of the U.S. Mint from 2006 to 2011.

Silver futures SIU20, +5.42% SI00, +5.42% settled at $24.501 an ounce on July 27, the highest for a most-active contract since August 2013. As of July 30, they traded about 25% higher this month, but stand nowhere near the record-high $48.599 from April 2011. In comparison, gold GCQ20, +1.59% GC00, +2.66% climbed to a record settlement at $1,953.40 on July 29, up around 8.5% this month.
Read:Gold rides to a record, with prospects for $2,000 an ounce stronger than ever

“Silver is not even halfway to its all-time high,” says Ryan Giannotto, director of research at exchange-traded-fund-issuer GraniteShares. While it’s unlikely silver would more than double in the immediate future, it’s “unwise to rule out extreme scenarios.”
It takes more than 80 ounces of silver to buy one ounce of gold. Though the ratio has seen a significant decline in recent months, it’s still well above the typical gold-to-silver ratio, which Moy pegs at one ounce of gold to 60 ounces of silver.
Read Metals Stocks column:Gold prices suffer first loss in 10 sessions
Ross Norman, CEO of precious-metals news and information provider Metals Daily, says the ratio between the metals rose to a 4,000-year high at 126 on March 18. “It has been clear for some time that silver was excessively cheap compared to gold,” he says. The ratio is still historically high, “suggesting there is scope for greater gains in silver still.”

He says gold “often looks to silver to ‘authenticate’ its rally,” and if the differential between the two metals becomes too wide, as it has recently, then gold “stalls.” For now, gold, at an all-time high, is largely “untethered from technical resistance levels.”
For those looking to invest in the silver market, futures contracts are “good for experienced speculators who know how to navigate complicated transactions and have time to make moment-by-moment decisions and compete with financial investment professionals,” says Moy.
For most individual investors, government-made silver bullion coins are an attractive way to invest, he says, and governments guarantee the weight, content, and purity of each coin. A spokesman for the U.S. Mint said the bureau has shipped 604,000 more ounces of silver bullion this year through June, compared with the same time last year.
Coins, however, may see “steep commission markups” over the spot price, says Giannotto. He considers ETFs the “best, easiest, and lowest-cost way to access precious metals.” The silver-backed iShares Silver Trust SLV, +4.09% has gained around 28% in July.
Silver can “trade idiosyncratically and, at times, violently,” so those entering the market may want to consider “balancing out exposure with other historically less-volatile precious metals such as gold or platinum,” says Giannotto.
https://www.marketwatch.com/story/silver-poor-mans-gold-no-more-2020-07-30