Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

Major Debt and Dow Collapse Will Set Ideal Conditions For Silver

Commodities / Gold and Silver 2016 Jun 27, 2016 - 12:22 PM GMT

By: Hubert_Moolman

Commodities 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:

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.

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

Warm regards

Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

© 2016 Copyright Hubert Moolman - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules