Now seems like a good time to update my commentary about the
two year silver cycle. In 2007, I identified the silver price surges of
2003 and 2005 as a possible repeating pattern, and I guessed that buying
silver in the summer of 2007 and selling it in the following spring could
produce substantial profits. That proved to be a good call and timely too,
since silver bottomed only a few weeks later and then moved sharply higher
into the spring of 2008 that I identified as a good time to sell.
Unfortunately, I also guessed that the following up cycle would be from the
summer of 2009 to the spring of 2010. Since there wasn't a major rally then,
the two year silver cycle seemed questionable. The major rally in silver from
the summer of 2010 to the spring of 2011 added confusion because it looked
like silver rallies were almost random.
Looking back from a few
years later, I now think the two year pattern may well still be a force to
consider in the silver market. My guess is that the unprecedented financial
disaster from 2008 to 2009 did more than depress the price of silver. That
time of great economic uncertainty also caused the silver rally predicted for
2009 to miss a year and begin in 2010 instead. If that view is correct, then
the implication is that silver is due for another substantial rally,
beginning in the summer of 2012 and continuing into the spring of 2013. The
updated table below shows the results of the rallies since 2003, and
speculates on the potential profits from buying silver now and selling in the
spring of 2013.
The top of channel line
in the silver chart below extends to almost $95 by April 2013. In a rally of
that magnitude where the price of silver more than triples in 10 months,
overshoot to $100 is easy to envision.
For those who prefer
gold, the two year silver cycle projects good news for them too. The chart below
shows the comparable gold rallies, and the top of channel projection to
$3,000 by April 2013, so gold could potentially almost double in the next
Note that this commentary
builds on the "foundation" of Optimistic guesswork, so caution is
recommended, and DYODD is required! Here's hoping, however, that all of us
have much better luck than the banksters who will
be selling short into the next big rally!
2 July 2012
* * * Notice *
This commentary presents only the viewpoints of the Optimist, and it is
intended only for perspective and entertainment. Please do not interpret any
portion of this work as investment advice. If any of the concepts discussed
here appeal to you, then you must do the work to decide if and when and how
you should invest. The Optimist does not ask for any profits you make, and he
cannot be liable for any losses incurred as a result of your investment
decisions. The Optimist wishes you the best of luck in whatever you decide to
do or not to do. Cheers!