Wednesday, January 12, 2011

Silver Bull Market - 70s vs Today



Here's a couple of interesting charts. I compiled it using data provided by the Perth Mint. You cant download the data for yourself from here:

Precious Metals Prices

The above two charts were achieved by taking the (monthly) London Silver Fix (average) and calculating the month on month growth (whether negative or positive). Each green bar represents one month of growth.

The 1970s Silver bull market ran for approximately 9 years.

The bull market we are in now has been running for approximately the same number of years.

The chart shows that the current market has been much more volatile. The large swings to the downside are evidence of that.

The chart from the 1970s shows just how suddenly things can turn where the price went parabolic with very little warning at all.

It is my opinion that we are in/entering the third stage of the current bull market for precious metals. That doesn't mean I think we are near the price peak, but I do think we will see the peak within 12-24 months.

I am in the process of writing a post that explains what I am seeing that points towards this outlook, I should have it up in the next few days.


BB.

Disclosure: Positions held in Silver. Not investment advice. Do your own research.

3 comments:

  1. Hey mate, always find your blog useful and unbiased. Keep up the good work!

    Anyway, I have a question for you. If there was an economic crisis or disaster, I understand that stocks would go down but precious metals (which are seen as a safe haven) would surge in price. What would happen to stocks of silver mining companies?

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  2. Hey Scope, there is no guarantee that precious metals would hold up during another crisis. As we saw in 2008 a liquidity crisis could essentially pull down the price of any asset including Gold/Silver.

    It would probably depend on the nature of the crisis as to how stocks and the metals react. For example if we saw a defalationery crisis we may still see Gold/Silver rise, so the producers would do well, but the junior explorer stocks might find it hard to source cash for further exploration and development, so we could have a situation where some Silver/Gold mining companies do well and others do not.

    An inflationery/currency crisis might boost the price of the metals and all of the commodity based stocks, but some general stocks might suffer (e.g. financials).

    There is a lot of conflicting view on how things might play out, what sort of crisis we might see, however it plays out I think Gold/Silver will continue to rise (even after shorter term corrections) so continue to keep my $ exposed to these assets.

    Cheers

    BB.

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  3. Thanks Hobo-jo. Always appreciate your insight! I was looking around the internet and found this.

    http://www.financialsense.com/contributors/nick-barisheff/gold-outlook-2011-irreversible-upward-pressures-and-the-china-effect?q=node/1466

    Thought you might be interested as well!

    ReplyDelete