• 2 hours Airlines Could Recover, But Crew Remain Elusive
  • 2 hours Meet The Man Behind The World's Most Exciting Oil Play
  • 1 day Crypto-Mining Immigration Could Be The Start Of A New Trend
  • 3 days Hawkish Fed Sends Gold Prices Crashing
  • 4 days Bezos Is Heading To Space This Sunday
  • 7 days El Salvador’s Surprise Bitcoin Move
  • 10 days Markets Unfazed As Inflation Hits 13-Year High
  • 11 days How the Token Economy is Disrupting Financial Markets
  • 13 days FBI Investigating 100 Types Of Ransomware Attacks
  • 15 days Fed Ends Corporate Credit Emergency Lending Program
  • 17 days AMC Becomes the Latest Winning Meme Stock After GameStop
  • 19 days The Real Reason Your 401k Has Been Lagging
  • 19 days China Lifts Cap On Births, Allows Three Children Per Couple
  • 21 days The Market Is Ripe For Another GameStop Saga
  • 24 days Senate Grills Big Banks Over Pandemic Opportunism
  • 26 days Cannabis Has A Major Cash Problem
  • 26 days Ransomware Netted Criminals $350M In 2020 Alone
  • 27 days Russia Is Taking On Google
  • 28 days Chinese Regulators Deal Another Big Blow To Bitcoin
  • 29 days Ohio Residents Brave Vaccine for Chance To Win $1M
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

  1. Home
  2. Markets
  3. Other

Major Debt and Dow Collapse Will Set Ideal Conditions For Silver

The current silver bull market is similar to the bull market of the 70s in many ways. Despite the similarities, silver will ultimately perform much better than during the 70s.

One of the big reasons for this is the fact that debt levels are so much higher today, than during the 70s. Not only are debt levels higher on an absolute basis, but also on a relative basis. For example, Total Us Debt as a Percentage of GDP is about 360% today, whereas, in the 70s it was around 150%.

The reason that higher debt levels will contribute to a more powerful silver bull market is because silver is basically a complete opposite of debt. This is evident in the fact that silver and bonds (debt) have historically moved in opposite directions. If silver is going up, then bonds are going down and vice versa.

With debt levels at all-time highs, there is not much more room to take on more debt (like during the 70s), which can slow down any silver price advancement. Furthermore, with debt levels at all-time highs, credit has more potential to fall or crash (and it will).

However, these higher debt levels will only cause a more powerful silver rally if the debt bubble actually bursts, and does so at the correct time, and in the right manner. Then, not only will silver's advancement not be slowed down, but it will get a major "turbo" boost (more than it got during the 70s). The following fractal analysis shows that this is likely the case.

Below, is a long-term interest rate chart (data from R Shiller), to illustrate the above:

Long Term Interest Rates
Larger Image

Note: it is important to understand that interest rates are an indication of the value the market places on debt (or bonds). If interest rates are low, then the market places a high value on debt, and if the interest rates are high, then a low value is placed on debt.


So, if the debt bubble bursts, it would mean much higher interest rates.

On the chart, I have marked two fractals (1 to 5). Both fractals start at point 1 - the major interest rate peak just after a major silver peak (1919 and 1980 respectively). From point 1 to point 4 on both fractals, a cup-type pattern was formed.

On both cups there were major silver bottoms at point 2 and 3. Points 4 to 6 formed the handle of the cups. During the handle of both patterns, major Dow peaks were formed.

Very close to point 6, on both patterns, a silver bottom was formed (point S). During the 70s, that was the silver bottom (January 1976) just before the final silver blow-off stage (1976 to 1980). The current bottom at point S (December 2016) is the bottom that could lead to the final blow-off stage.

If the comparison is justified, then we should look for a breakout of the current pattern, just like the old pattern did around 1978/1979. A breakout from these cup-type patterns can be quite explosive, just like the old pattern illustrated. A change in the direction of interest rates, as shown on the current pattern will be much more significant than that of the 70s, since it would signify a major trend change.

This is the type of trend change that one should expect to see when the monetary system is collapsing, while silver goes parabolic. This is further solidified by the fact that it will happen at the same time as a major change of trend for the Dow, due to the coming Dow collapse.

Warm regards,

 


For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

 

Back to homepage

Leave a comment

Leave a comment