Why The Coming
Silver Rally Might Be The Greatest
By Hubert Moolman
23 July 2019
In the last one
hundred years there have been some great silver rallies. Some have
been greater than others though.
The economic
conditions underlining the different silver rallies were not all the
same. Obviously those that occurred during conditions most conducive
to silver rallies were the great performers.
The coming silver
rally could be the greatest especially since it potentially has most
conditions in common with the great silver rallies.
Gold/Silver Ratio
(GSR)
The most ideal
time for a silver rally relative to the Gold/Silver ratio is
after a major peak in the GSR and as close to the all-time high as
possible. This is because the Gold/Silver ratio is to silver rallies
much like cycling down a hill is compared to cycling up a hill is to
a cyclist.
In other words, when
you cycle down the hill you can go much faster; just like silver can
go much higher when the GSR is in decline.
Note that it is
important to understand that it is underlying economic conditions
that manifest in the form that economic indicators (like the GSR, for
example) eventually take. So, for the sake of simplicity, I refer to
the economic indicator as the conditions.
Below is a image
(from macrotrends.net) of a Gold/Silver Ratio chart (above) and a
Silver chart (below):
The red lines mark
the beginning of the important silver rallies, and the green the end.
The rally that started in 1941 started at an ideal time relative to
the GSR. The current silver rally potentially has this in common with
the 1941 silver rally. Note that that the other rallies started at
less than ideal times – they had hills to climb.
The fact that
debt-levels are currently at an extreme, and that we are likely to
have major stress in the credit markets make this possibility very
likely. It is therefore, no coincidence that interest rates bottomed
close to the start of the 1941 rally as well as the current rally.
Dow
The most ideal time
for a silver rally relative to the Dow is to start after the Dow peak
and as close to the high as possible. Again, one can use the cycling
downhill analogy. Also, the Dow needs to trend down during the whole
period of the silver rally.
Below is an image
(both from macrotrends.net) of a Dow chart (above) and a Silver chart
(below):
The red lines mark
the beginning of the important silver rallies, and the green the end.
The silver rally that started in 1971 began at the ideal time
relative to the Dow. The current silver rally also potentially has
this in common with the rally of 1971, which would give it an
advantage over the 1941 silver rally.
If the expected
credit distress plays out, it could potentially cause the Dow to
decline significantly over the coming years. This could give the
current silver rally an edge over the one of 1971, since the Dow did
not not have much of a net decline over the entire period of the
silver rally.
Either way, it
already has an edge over the 1971 rally due to it starting ideally
relative to the GSR.
Interest Rates
The most ideal
time for a silver rally relative to interest rates is to start
after a major interest peak and as close to the low as possible.
Also, it is ideal if the entire rally exists during an interest rate
uptrend.
Below, is a
long-term silver chart with major interest rate peaks and bottoms
indicated:
Again, the 1941
silver rally started at an ideal time relative to interest rates. The
current silver rally potentially has this in common with the 1941
silver rally. However, the interest rate bottom of 2016 is lower than
the 1941 bottom, and is the all-time low of at least the last one
hundred years – again, giving the current rally a potential edge.
Conclusion
The current silver rally has the best ingredients to be the most explosive silver rally for the last 100 years.
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