The Silver Sentiment Cycle — Turnaround Coming?

According to the work of Gary Christenson, the price movement of silver over the past several years resembles what took place during the 1970’s, when silver shot up to nearly $50 in 1979.  Gary provides some excellent charts showing similar silver sentiment cycles during the 1972-1979 & 2008-2014 time periods.

The Silver Sentiment Cycle

by Gary Christenson

The following chart shows:

Silver Sentiment 1

Silver Prices: 1972 – 1979

• Silver moved upward from about $1.40 in 1971, rallied to about $6.40 in March 1974, and fell to about $4.30 in August 1977.
•The March 1974 peak took about 3 years and ended about 4.55 times its starting point.
•The August 1977 low took another 3.5 years and fell about 33% from the peak price.

Now look at the following chart of silver prices from 2008 – 2014.

Silver Sentiment 2

Silver Prices: 2008 – 2014

•Silver moved upward from about $8.53 in October 2008, rallied to over $48 in April 2011, and fell slightly below $19 in September 2014.
•The April 2011 peak took about 2.5 years and ended at about 5.7 times its starting point.
•The correction into the September 2014 low has taken about 3.4 years and declined about 61% from its peak.

Do you see the similarities? I have placed sentiment labels on both graphs.

Sentiment table 1

What is Different This Time?

Probably not much! The patterns are similar, but the potential rally from present prices in 2014 looks like it could be even larger than the 1977 – 1980 rally. Why? See below. In the early 1970s silver went from “ho-hum” to “enthusiasm” to “wow, who would believe it could go to $6.40?” After the 2008 crash silver went from “going back to 5 bucks” to “enthusiasm” to “wow, who would believe it could go above $45?”

As a reminder, after silver rallied to the then astounding price of $6.40 in early 1974, it crashed back to $3.80 and then traded sideways for 2 years. Less than 3 years later it had briefly traded at $50.00, due to a combination of inflation, debt and deficits, political issues, conflict with the USSR, fear, a market corner, and dollar weakness.

After rallying to another “unthinkable” price of nearly $50 in 2011, silver crashed to about $18.50. However, in another 3 -5 years, perhaps in 2017 – 2019, I expect silver will have rallied to $50, $100 or maybe $300 or more, due to a combination of multiple wars, unpayable debts, inflation, deficits, bailouts, bail-ins, massive “money printing,” inflationary expectations, QE, potential hyperinflation, considerable fear, currency wars, counter-party risk, political issues, derivatives, conflict with Russia, economic and dollar weakness, and the weakening or outright loss of the dollar’s global reserve currency status.

We know that financial television (and others) expect (hope) the S&P to rally and silver to collapse, but we must remember who pays the bills for financial television, buys the advertising, and supports the various fictions in our current economic and political environment.

Along with many others, I expect that silver will rally for the next 3 – 7 years.

Sentiment table 2

I expect that silver will rally well over $100 in the next few years because most or all of the “favorable” and few or none of the “unfavorable” items listed above will occur.

Does this month look more like another bottom in silver and another top in the S&P, or does it look like a new paradigm with responsible leadership in the political and financial worlds, lasting employment, prosperity for all, declining debt, and a balanced government budget?

Are you buying silver instead of bonds? Are you buying silver instead of S&P indexed funds? Are you buying gold instead of earning 0.10% interest in your saving account? Are you preparing for a financial future based on real assets instead of paper promises secured by the integrity of politicians and bankers?

Original article was written by Gary Christenson of DeviantInvestor.com.

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17 Comments on "The Silver Sentiment Cycle — Turnaround Coming?"

  1. Silver Curious | September 16, 2014 at 5:12 pm |

    I hope not yet … I have more fiat coming in that I want to convert to Phyzz in the sub 20’s.

  2. While a lot of people can’t wait to see the price of silver move higher, i hope it will stay there another year cause it will give me time to buy more 😉

  3. Why is it nobody likes that guy, chet. Everyone is always saying, ” NO, NOT CHET “! Nice article, makes the case for physical plain and concise.

  4. nothing new from The Tard since his last vlog a week ago :
    http://www.youtube.com/user/Rawdogletard

    only new thing of note, interestingly not called or foreseen or even mentioned by any of the ‘experts’, is the new Shanghai FTZ phys gold exchange is to open sept 18 here, 11 days ahead of planned.
    day after FED FOMC meeting tomorrow 17th, & same day as Scot referendum.

    but don’t worry, they won’t be leaving officially till MAR24/2016 even if they vote yes.

  5. “What is Different This Time?

    Probably not much!”

    EVERYTHING is different this time. Starting with sophisticated computerized price management/manipulation. Quoting from Ed Steer’s column today:

    “But as wonderful as current bullish structure is in the Comex futures market, how fast and how high we rally will be determined by how the Commercial traders respond as the technical funds/managed money traders begin to cover and go long. Nothing else matters!!!”

  6. New Reality TV quiz show coming that just might mark a bottom (but not THE bottom) in this sector:

    Axe The Expert:
    http://www.youtube.com/watch?v=GX1X9Uv1fFc

    and u thought losing on Dubble Jeopardy was bad.

  7. Very strange indeed?

    The amount of open interest (OI) on the COMEX silver sector. The beat down of price requires the “sale” of paper silver. For every short sale there is a long side. The manipulators have failed to shake the long holders from their positions. The contracts are held in strong hands, with deep pockets. (China?)

    There are approximately 60 million ounces of registered/available silver at the COMEX. Yet the number of contracts for December silver sit at 700 million ounces! Thats more than a 10 to 1 ratio of paper to physical.

    This is where it gets even stranger! The amount of open interest in gold is quite small when compared to that of silver, which sits at record levels. With the price of silver withstanding attack, after price attack, day after day! Somethings got to give. The pressure has been constantly building.

    Remember, contract settlement in cash is still a failure to deliver. Which is default.

    • “Remember, contract settlement in cash is still a failure to deliver. Which is default”.

      these players aren’t ready/willing to crash the game they play in; they will take cash short of a panic of some sort.

  8. I’m not disputing either the analysis or the possibility that it is correct. However, IMHO, in a market which is so badly manipulated, TA doesn’t really mean much. In fact, the Cartel can and does use only technical levels which suit them to further manipulate the “Market”.

  9. Although I often read this great site ( my compliments to Steve for his work, very interesting data) this is my first intervention: I’m from Italy and my english is pretty bad, sorry.
    Well… I don’t see too many similarities in the two charts.
    Maybe the sentiment corresponds, I don’t know, but in the second chart there is a well defined downtrend, downtrend lacking during the seventies.
    I would not be surprised to see lower and lower prices in near future.
    Don’t misunderstand me: I started to stack gold and silver in 2004 and 2005, so I’m glad if I’m wrong.

    • Key support starts to kick in when Comex prices get too low, causing a bottom. More entities go long. The commercials profit off of going short at times and going long at times.

      This is a game played by the big boys.

      It may take a “black swan” event for a customer who has the right to insist

      • cut off somehow…

        It may take a “black swan” event for a customer who has the right to insist on physical delivery in excess of what is available to demand that physical over cash. If they do they break their game; no more playtime.

        And those who orchestrate this charade may bribe or threaten to get an entity to take cash over physical delivery.

    • Giorgio,

      Thanks for the comment. While you are correct that the present Silver Sentiment Chart is heading lower, I believe that is due to manipulation of the gold and silver market that wasn’t taking place on the GRAND SCALE in the 1970’s as it is today.

      The present market conditions are much worse as well. The U.S. didn’t have a $17.7 trillion debt, massive bubbles, and a Banking Industry on the verge of collapse.

      steve

  10. Despair – $18.70? Yeah right. So many bulls and clown pumpers out there telling people to load the boat right now it’s not even funny. We’re not hitting despair until at least $13.75.

  11. My biggest concern is that with all the spying software, police-state antics and the fingers that would be pointed at China if they indeed pulled the plug on the Comex by causing it to default, all of a sudden holding precious metals would be viewed as either aligning with the enemy, or a windfall/wealth tax would be implemented which wipes out any potential gains from anyone who happens to hold physical. And that they know this now, the puppet masters, so they aren’t concerned about our stacking because they know they will get it all back when the time comes.

    • I wouldnt put it past our government to try anything but I think if they started a windfall/wealth tax or tried any other sort of confiscation attemp, the American people would rise up due to everything going on in our country and around the world……..only time will tell

    • COMEX contracts allow for settlement in cash instead of physical delivery. I do not think that a forced cash settlement will be viewed by anyone other than us hard money guys as a default. Everyone buys and sells their silver at COMEX prices even though very little of it is delivered from COMEX. It’s a scam but few seem to care. What difference will a few forced cash settlements make to anyone??

      What is going to send silver to the moon is investor demand. A small ripple, such as “what do you mean I have to wait 30 days to withdraw my money market funds?!” will create just enough demand for silver to overrun supply. A quicker solution to drive silver might be, “what’s with this daily withdrawal limit of $300? I’ll never get my $50,000 nest egg outta this sham bank at that rate!”

      Oh what fun is ahead. Make sure you have popcorn on hand.

Comments are closed.