• 657 days Will The ECB Continue To Hike Rates?
  • 658 days Forbes: Aramco Remains Largest Company In The Middle East
  • 659 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,059 days Could Crypto Overtake Traditional Investment?
  • 1,064 days Americans Still Quitting Jobs At Record Pace
  • 1,066 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,069 days Is The Dollar Too Strong?
  • 1,069 days Big Tech Disappoints Investors on Earnings Calls
  • 1,070 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,072 days China Is Quietly Trying To Distance Itself From Russia
  • 1,072 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,076 days Crypto Investors Won Big In 2021
  • 1,076 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,077 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,079 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,080 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,083 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,084 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,084 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,086 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

  1. Home
  2. Markets
  3. Other

Silver - About to Explode?

Most Gold bulls are silver bulls. The 1970s is the reason why and because inflation that occurs when a secular commodity bull cycle is in effect tends to flow into both precious metals. I have been less than wildly bullish on silver lately.

I own some physical silver but hold much more Gold. My concern is simple. In past deflationary cycles, Gold has done well but silver not as well. Since I favor deflation over inflation for this cycle, I heavily weighted myself towards Gold and only hold a little silver. I even made the stupid mistake of shorting silver a few months ago and had my a$$ handed to me.

Silver made a big move today and a short-term break out. Silver can make explosive moves up and down and with a push slightly higher, silver will have a confirmed breakout that targets new highs for the decade. Unlike Gold, silver is still a ways from its all-time nominal high around $50 during the last silver bull market in the 1970s. If silver makes new highs in the next few months, the deflation scenario won't be looking so good.

Though I have believed deflationary forces were too powerful to be overcome by government intervention, global capital flows and/or an insane level of intentional wasting of money may prove to be too much. If silver breaks out to new highs for the decade, the deflation argument is going to look mighty thin. I remain hedged with Gold, as an inflationary holocaust means that Gold will peak in the $5,000-$20,000/oz range instead of the $2,000-$3,000 range. Either way, Gold holders will win over general stock holders. However, in a heavy inflationary environment, I believe silver has greater upside potential than Gold. Needless to say, I am going to hang on to my remaining physical silver until I see how this one plays out.

Here's a daily chart of the silver ETF (ticker: SLV). This ETF doesn't hold the silver it claims to and is believed fraudulent, but is being used for charting purposes because it can show volume. Silver bulls are advised to hold physical bullion as their core holding. I am not saying this ETF can't be used for short-term trading, but paper is paper and metal in your possession is metal in your possession. Anyhoo, here's a one year daily candlestick chart of SLV:

Here is a long-term weekly chart of silver ($SILVER):

Mr./Ms. Market is always right and those of us trying to keep up with him/her have to be flexible. I am learning not to fight the tape and instead embrace it. If my deflationary stance proves wrong and the government bond market is no longer relevant, so be it. As a Gold holder, it doesn't matter to me - heads I win, tails I win more. Silver is on the verge of sending out a powerful warning to the deflationists to reconsider. If it occurs, I'll be among the first skeptics to give it props and respect the move. If it doesn't, I promise not to act like I saw it coming all along, as today's move in silver was not what I expected.

You're not going to hear inflexible Prechter-like deflationary dogma from me if silver breaks out to new highs for the decade. The Dow to Gold ratio is my secular compass, not the inflation-deflation debate. We should know within a few days whether or not this move in silver is the real deal. Perhaps I'll have to start digging into, researching and expanding my junior silver miner stock list sooner than I thought...

 

Back to homepage

Leave a comment

Leave a comment