Saturday, September 24, 2011

Silver - Collapse Resumes - 2012 Target $6.50

Silver has begun the largest leg down now, and has resumed the collapse that started in April. 

My theory has been confirmed as explained earlier this summer, and the recent collapse in Silver and Gold was indicated by the symmetrical patterns.  Fundamentally, the European crisis is nearing an end, and this is clearly reflected by the recent price behaviour of Gold and Silver.  Notice that I did not say "solved", but rather the current "crisis" is nearing an end due to the cycles.  Without a crisis on the near term horizon, there simply is no reason for Gold or Silver to act as a safe haven. 

In coming days many will say that the reason Gold and Silver are collapsing is because deflationary pressures are building similar to the Summer of 2008.  Gold fell in the Summer prior to the Sept. 2008 market crash. 

This view is simply incorrect.  Without a crisis there is no use for a safe haven.  It is just that simple.

Silver target for 2012 is $6.50.        

Daily Chart

The completed symmetrical pattern is shown below.  Silver flirted with the main red trendline several times, and then collapsed out of exhaustion.  Notice that the pattern on the Right side of the Cycle Line is stretched out time wise compared to the Left side. 

Price will now "catch up" for that time with a severe plunge down to the 2012 target of $6.50.  The implication of the symmetry is that the entire bull run in Silver will be retraced.

2hour Chart




  3. Aug 23rd I said:

    "After this dip, a retest of the highs or double top for Gold may be most probable. There isn't enough to say for sure yet, but Gold may have topped.

    Silver is more likely to have one more strong push in it after this dip. The theory is Silver tops after Gold."

    I'd like to see more later this week for the metals."

    It was a perfect double top for Gold that came soon after.

    Silver did also see a final strong push after, but had already topped. I thought at the time that point 12 may just go slightly over point 10, but it never did. In fact it was actually idential to the Left side of the Cycle line.

    Aug 31st I said:

    "Thanks for the Silver chart. That red trendline is the one I have been charting as well. It has crawled up the line for a long time, but once it breaks, the move should be spectacular."


  5. Pretty bold statements. I am in total disagreement but that's what makes markets.

  6. cant see how the Euro crisis is anywhere near over but hey...

  7. Yep, me too. This credit (debt) crisis isn't over by a long shot. The riots haven't even started here yet.

  8. To be clear the Euro situation (and Global situation) isn't going to be resolved any time soon. It will be an ongoing problem for years to come.

    However, the PM's are sending the signal that the current phase of Euro crisis is nearly over - early Oct. The Euro situation is a loss of confidence, and that confidence will ebb and flow - as always. That is the nature of cycles.

  9. Gold and Silver are probably completing their 34 month cycle from Oct 08. A significant low should be close by. Merrimann suggests that 29 Sep, where Venus conjunct Saturn could be a candidate date to watch out for reversal. Oct 7 onwards, Jupiter will be backing and crossing the 7 deg Taurus point, and a relief rally will likely be on the cosmic agenda.

  10. I have been reading your blog and other people's comments for awhile and found them to be very informative. However, I must say I do not quite agree with your price target for silver. Is fundamentals, supply and demand not important? If silver goes to $6.5, there will be no profit for any silver mining company to mine silver which will lower the supply greatly. Then even with decreased demand, the physical silver will be so hard to get that, the price will need to go up. Unless there is a disconnect between the paper price of silver and the physical price of silver, where people pay huge premium to get their hand of physical.

  11. SC. This is very bold statement, if Europe crisis is going to resolve or improving then I don't see deflationary pressure I see inflationary which will take silver to opposite direction. May be to 60:-) also you missing giant USA debt issue.....Europe is dealing in billions where USA is dealing in trillions....

  12. This is why I generally prefer to stick to shorter term time horizons with the charts I show. It is hard to imagine Silver at $6.50 I realize, and as the chart above shows I am generally bullish on Silver now for the next few months.

    The way I see it Silver demand as a safe haven plunges now. That is mainly why Silver is falling now.

    The fear trade topped and is unwinding. On July 18th Silver was trading at $40.50 roughly. On that day "Silver" was the number one search word on Google. This was a good confirmation that the average retail investor is fearful, and interested in chasing Silver (and Gold) as a safe haven.

    It went up for another month, and topped a few dollars higher. Now Silver is just above $30 after falling $10 in 2 days. When a trade is crowded it will go that way for a while longer, but then it does collapse. The bulls are trapped and the trap door opened.

    Silver is going to be hit with a double whammy here. First, the fear trade unwinds, then the next phase (next year) is a severe deflationary collapse of all markets. People will be forced to sell Silver holdings at the bottom to pay for necessities.

    After that severe deflation comes a massive bull market for Silver and Gold lasting decades.

    Timing is everything. Always!

  13. SC, so you think that after this big plunge of $ 10 in 2 days, silver may retrace 50% or something and then slowly fade away?

    But ooouch silver at 6.50, I can imagine what will happen to real estate in Canada? interest rates we are looking for record low for next 5 year?

    Hard to see from where we stand today..with businesses have put solid growth for last few Quaters...and hoping for another strong round of report coming soon..


  15. Gabe,

    How can I see your links? I am not able to click or even doesn't work by copy to address bar....


  16. stock....

    Don't know, works fine for me when I copy in.........joed

  17. I just cut and paste to the address bar, and the charts seem to work ok. Nice chart, for ZSL $23 would be my target short term.

    Silver should make a sharp bounce before it hits bottom. So a dip to $17 area for ZSL next week would be a spot to watch for short term trade.

    The moves drawn in white on the top chart is my expectation for coming months.

  18. I have specific thoughts on the situation in Canada. I'll post some charts on TSX as well.

  19. DZZ DAILY.......

  20. probably the all time worst article ever written

  21. Perhaps you will find this previous article was well written...

    "However, due to the larger cycles, this also means that Silver topped in April, and a major lower high could complete by mid-August with a steep decline to follow."

    The mid-August top was just before the most severe decline in Silver in 30 years. The pattern is already confirmed, target $6.50.

  22. Cool, I could buy sooo many physical ounces at 6.50!I won't even be thinking about selling for 10 to 20 years.