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Silver bull Market and Central banker Bullshit

On August 7, 2019 Silver opened at $16.44 and closed at $17.07 – this gain of 63 cents launched the next phase of the Silver bull Market

It doesn’t matter what financial vehicle you want to talk about, a 3.8% move in one day is significant

And, in Silver’s case, this huge move was a breakout through a long-term Support and resistance level dating all the way back to 2010 as we can see in the monthly chart below

Silver price - Charts confirm the 2019 breakout

Breakout in Silver bull Market

For Silver Bulls, the MACD in this chart is truly exciting


There is a tremendous amount of room for the white metal to run before it gets anywhere close to the level of overboughtness that stopped the 2011 Silver bull Market


In the current secular Bull Market for Precious metals, Silver is likely to be sporting at least a three-digit price tag


$130 to $170 is on the low end of price forecasts, with something in the neighborhood of $625 on the high end

Silver bull Market hits resistance

Using predictive Technical analysis tools like Andrews Pitchfork and Fibonacci extension we can accurately predict how the bull Market will unfold


In the weekly chart above we can see that the price breakout brought Silver to a resistance level identified by the upper-median-line-extension of the Schiff pitchfork


When price runs into a resistance zone like this we can expect price to at least pause, and perhaps pullback for a rest

Silver testing resistance

The monthly and weekly Silver price charts show the big picture


When we want more detail we can dive into the daily time frame


In the chart above it is clear that Silver is testing the resistance level from below in an attempt to break higher

Gold confirms Silver bull Market

After breaking above $1500 in mid-2019 the yellow metal rallied to a high of $2075 in August 2020


That's a gain of 38% in 12 months


Gold is poised for another big rally in 2021 and the current price target is $2357


From the current price level around $1780 (as of 04/28/21) reaching the $2357 target will mean a rally of about 32%

Mining stock ETF

The most recent candle in this price chart of GDX is a good example of the leverage that Mining stocks provide to the price of the physical Precious metals


While Silver vaulted 2% higher and Gold surged 1.9% higher, the Mining stocks added a full 3.5% to their collective prices


In a typical Precious metals rally the Mining stocks will multiply the gains of the physical metals by a factor of 2 or 3


For example, if the price of Silver increases by 30% the Mining stocks will usually advance by 60 to 90%

Silver bull Market 2021

In the monthly chart above we can see how Silver has performed since the mid-2019 breakout


The 'Big Scary Plunge' in March 2020 was not a fun event, regardless of which Financial markets an Investor had positions in


Investors who bought the Silver breakout in mid-2019 and held through the Big Scary Plunge are currently sitting on gains of approximately 57%

Phase three of the Silver bull Market

During a bull Market, one of the risks that Investors face is that prices tend to make vertical moves to the upside


Conservative Investors can easily be left on the sidelines wishing they had a position


In the current bull Market, we have the added factor that the metals have now begun the second upward leg of their secular uptrend which began in 2001 (or 1999 if you prefer)


There are two ways we can refer to the current price movement


In Elliott Wave (EW) terms, the metals have begun wave three of a five wave movement


Third waves tend to be very powerful

In Richard Russell’s terms, Silver and Gold have entered the third and final phase of a tremendous Bull Market that historians will write about for decades to come


According to Richard, the third phase is when widespread acceptance of the 'new' Bull Market occurs, leading to manic behavior on the part of Investors and parabolic price action


In either case, we are likely going to bear witness to numerous vertical jumps higher as the Precious metals seek their true value in this world where all things financial are currently enumerated in worthless fiat currency

Global economic reset

One of the fundamental factors we have to consider is a Global economic reset where one or more countries launch a new currency backed by the Precious metals


For example, China and Russia could announce one Monday morning that the Yuan and Ruble are now tied to Gold at a price of $5,000 per ounce


The price of Gold in all fiat currencies would immediately jump to the new level


Silver would follow Gold higher and, most likely, the Gold-to-Silver ratio would instantly drop to something in the neighborhood of 50 or even 40


Equities of the Precious metals Mining companies would explode higher


And all of the Investors waiting for a conservative entry into the Precious metals Market would be left on the sidelines warming the bench – hopefully, you won’t be one of them

Update on Crazy Town

I tell ya’ folks, it ain’t easy being a Texan sometimes


Much of our history is based on ranching and cattle so we know exactly what bullshit looks and smells like


This Texas heritage makes it easy for us to spot the brown smelly stuff, and it is being spread especially thick right now by both politicians and Central bankers

Sorry, I’m allergic to bullshit.

~Will Smith

Of all the remarkable events of 2019, one of the most remarkable IMO was having England’s chief central banker, Mark Carney, call for a new global currency at the Jackson Hole Symposium (23 August 2019)


Acknowledging that the US Dollar and all of the other 180 fiat currencies on planet Earth are doomed is actually a sign of intelligence (and honesty) on Mr. Carney’s part

Big stinking Cow-patty

The big stinking cow-patty is his suggestion that the new reserve currency be virtual


Replacing worthless paper fiat currency with worthless virtual fiat currency is not going to change anything or solve any of the current problems plaguing human beings here on the big blue marble


At best, it would allow the Central bankers and politicians to maintain the status quo for a little while longer


And in case there is any doubt, the status quo that they are desperate to maintain involves financially screwing-over 99% of the planet’s population in order to enrich the other 1%


And if that isn’t bullshit, I better hang up my spurs

I don’t have a short temper,

I just have a quick reaction to bullshit.

~Elizabeth Taylor

These are definitely interesting times, position yourself accordingly for the Silver bull Market

Silver Gold ratio says Silver is cheap

Silver became ridiculously inexpensive relative to Gold in mid-2019


The Silver-Gold ratio (SGR) has since dropped back into the range that the two metals have maintained for most of the past 30 years


There are at least two factors pushing Silver's price higher and the SGR lower:

  • Retail Investors tend to favor Silver over Gold because the white metal is lower in price - they get more ounces for their money buying Silver
  • The push for solar power, 5G networks, and electric vehicles will increase industrial demand for Silver while industrial usage of Gold will remain fairly constant

Notice that the SGR dropped down to 15 in January 1980 when Silver spiked up to $50 for the first time


An extreme move like this is likely to mark the end of the current secular bull Market in Silver several years from now


On any move below 20 in the SGR Satori Traders will be trading Silver for Gold or other asset classes

Silver bull run 2021

In 2020 Silver gained 47.8% in price while Gold gained 25.1%


This outperformance of Silver is expected to continue throughout the secular Precious metals bull Market


Investors seeking the largest gains might choose to overweight their Portfolios towards Silver


One of the ways we can determine a target price for Silver in 2021 is to divide Gold's target of $2357 by the current SGR of 68


That gives us a Silver price of $34.66 but that seems too low and only represents a 35% gain from current levels


We are expecting Gold to rally 32% in 2021 in order to reach the $2357 target so it is reasonable to expect more than a 35% gain from Silver


If we apply Silver's 48% gain from 2020 to the current price we get a potential Silver target at $38.48 which still feels too low


Given all the bullish factors driving the price of Silver higher in 2021 it is likely that we will see another test of the $50 level

Silver Bullion

There are several ways to Invest in the Silver bull Market

  • Bullion bars and Coins
  • junk Silver Coins (US currency prior to 1965)
  • numismatic Coins
  • ETFs and Trusts
  • Mining stocks

Start your Precious metals Portfolio with an Investment in junk Silver Coins 


These 1964 and earlier US dimes, quarters, halves and Dollars contain 90% Silver and they are widely recognized as having value


Hopefully it never happens, but if we return to a barter economy it is likely that junk Silver Coins will play a key role


After acquiring 90% Silver Coins focus on purchasing the most weight of Silver metal possible for any given amount of money


In most cases this will mean Silver Bullion in bar or Coin form


The premium paid for Bullion will typically decrease as the weight of the bar or Coin increases


For example, a 10 oz. bar of Silver will cost more per ounce than a 100 oz. bar


After laying-in an adequate supply of physical metal you can then seek additional exposure to the price of Silver by Investing in the Trusts and Mining stocks


If you would like personal guidance when building your Silver Portfolio, reach out to us at contact @ satoritraders.com


   

Bryan V Post is a California-registered Investment Advisor Representative specializing in the Precious metals.

He is the founder and CEO of Satori Traders LLC, a California-registered Investment Advisor.


Bryan has worn numerous hats during his life:

Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.

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