Is the Silver Bull Market Over? This is one question
that we feel very confident that the answer to it is no; but still we are
specifically watching for articles or news stories suggesting that the
precious metals bull market is over. We have seen a few articles announcing
the end of the metals bull market and we will explain why this is significant
to us later in this article. But first, there are a host of reasons why we
think the bull market in precious metals is alive and well and we will
address a few of these reasons in this article.
Basic price performance of the precious metals market
simply does not match that of other bull markets. Yes silver did rise from
about $4.00 to about $50.00 but that is not nearly as impressive as it first
sounds. When we compare the price appreciation in the current bull market to
other bull markets we can clearly see that there is a lot of room for further
upside. The following chart illustrates other examples of bull market price
Next, given the quantity of money we have seen printed
around the world, we would expect to see even more of an extreme price move
than what we have seen. It is true that the price of nearly all commodities
has risen significantly, but the metals have barely budged in comparison to
the quantity of currency being printed.
When we consider the underperformance of precious
metals mining companies relative to the metals themselves we certainly do not
see signs of a “feeding frenzy mania”. Contrary to typical action
in a bubble market, the mining equities have been dismally underperforming
the metals as they wait for their turn to grow in value, like Cisco Systems
or Microsoft did in 1999.
In the above chart when the blue line heads up silver
is outperforming mining stocks and when the blue line heads down mining
stocks are outperforming silver. Looking back as far as 1984 we can see how
cheap mining equities are relative to the price of silver. At some point this
trend will reverse.
In our opinion the bull market in precious metals is
far from over, which makes the mining equities very attractive when compared
to the metal itself.
Why do we want to hear others talk about the bull
market being over?
We know that the best buying opportunities come when
investors feel negative and very pessimistic, because if investors are
pessimistic they are not investing, and if they are not investing the market
is cheap. When everyone is excited and jumping in with both feet, wet think a
wise investor should be cautious and take money out of the market. It is our
expectation that a great buying opportunity in precious metals is marked with
commentary about the end of a bull market. In our view it is positive news to
read stories about the end of the precious metals bull market.
Finally, we have a set of custom indicators that
suggest to us that the bull market in precious metals is alive and well. We
were expecting this latest correction and we continue to monitor its progress
Please visit our website to learn more about our system and to sign up for
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