Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

2017: Gold and Silver's Year of "Public Recognition"

Commodities / Gold and Silver 2016 Sep 29, 2016 - 05:48 AM GMT

By: MoneyMetals

Commodities

In all probability, December 2015 marked the bottom of the cyclical gold and silver bear market – a bear cycle that had been in play since silver topped in May 2011 and gold in September of the same year.

During the fourth quarter 2015, share price declines of the precious metals mining companies tapered off once the last of the weak hands gave up and sold their positions to stronger, forward-looking investors.


If you go to a free chart service like stockcharts.com, you can choose any number of mining stocks and look at their January 19 daily price action. On this date – for most of the top and second-tier companies – the last intraday price plunge took place. For purpose of example only, we have chosen Endeavour Silver.

Endeavour Silver Weekly Chart


Notice how the price made a new low, then moved up into the preceding day's/week's range to close on a strong note for the session. It’s likely this low print will not be touched again during the current bull run.

What Have Physical Gold and Silver Been Doing?

Silver has risen more than 40% so far this year; gold is up almost 20%. Dozens, if not scores, of mining stocks rose several times as much (as expected). In fact, Jim Flanagan, who keeps track of the size and duration of first leg bull market runs across many asset classes, had the following to say about this year's multi-month mining stock rise:

“The 175% Advance in Gold Stocks in 5 Months, 22 Days Now Places Us As the 11th Greatest 1st Leg Up in Any Bull Market in Any of the Tangible Assets During the Past 150 Years. In Other Words, It Is the Elite of the Elite.”

A few resource sector newsletter writers got their subscribers onto "the right side of the trade" early this spring, but a number of others either jumped out too early at the first sign of a "correction" (of which there have been 6), or sat out the entire year, waiting for what they hoped would be a low-risk entry point.

Silver Prices (2011-2016)

The World's Central Banks Are Buying Up Mining Stocks

While there was considerable institutional, individual, and hedge fund buying of both the miners and metals, an unexpected long side category of customer has recently emerged.

Deutsche Bank, Germany's (and Europe's) largest – otherwise in very poor financial shape – is said to be holding no less than 50 mining sector stocks, with a total market value of over $2 billion. The Swiss National Bank holds 25 stocks at a $1 billion market value. Now Norway's Central Bank (Norges Bank) has filed notice with U.S. regulators that it too holds securities in 23 mining stocks to the tune of just under $1billion.
Isn’t it ironic that the very financial entities who have been instrumental in flooding the world with un-backed currencies are now buying mining stocks as insurance for their own financial holdings? (Not to mention that, since 2010, central banks have been net buyers of physical gold!)

Public Recognition Will Kick In above $26 Silver and $1,500 Gold...

In almost every major bull market, the public begins to arrive at the party after the first few innings have been played. This time around we can make a guesstimate as to what price levels are likely to "trigger" a wave (waves?) of physical metals' buying by newly-informed, recently-committed members of the public.

Note on the weekly silver chart above, the $26 level when touched for the fourth time in 2013 broke down sharply, initiating a further two years of decline. A rule of charting is that broken support becomes resistance to a return move.
Therefore, it is reasonable to expect that $26 will offer a major (initial) impediment to rising prices.
When the $26 level is decisively penetrated on the upside and a base built above it, prices have the potential to accelerate rapidly.

David Morgan and I are working on a book dealing with metals and the mining stocks, titled Second Chance: How to Make, and Keep Big Money During the Coming Gold and Silver Shock-Wave, due out early this fall.

In one chapter, we list in bullet form some of the "indicators" we believe will mark the way for greatly increased public sector precious metals involvement. They include:

  • Upside penetration by gold of horizontal resistance-becomes-support (HSR) levels in hundred dollar increments from $1,500 to and through $1,900.
  • Penetration of and successful base-building by gold (via retesting) above $2,000.
  • Upside penetration by silver of horizontal resistance-becomes-support (HSR) levels in five dollar increments from $25, to and through $45.
  • Penetration of and successful base-building (via retesting) above $50 silver.
  • The leading edge of the public mania wave starts building as these upside layers of resistance are successfully penetrated and turned into support. 2017 is most likely the year during which the public recognition phase gets underway.
  • New all-time nominal highs in gold (>$2,000) and silver (> $50) ushers in even more public involvement, leading to what we believe will be the final and most massive move for the precious metals and associated shares.

As these events are taking place, the effect on availability (as well as on expanding premiums) for physical gold and silver will be profound. As new nominal highs in both gold and silver are printed, several situations begin to develop.

  • Precious metals become more difficult to find as available supplies dry up.
  • More counterfeit bullion and "collector" coins and bars circulate in the market place.
  • The price, first of gold, then silver becomes elevated to the point that fewer people can afford to buy in quantity. The market rations supply and premiums expand sharply.

Late August into September ushered in an intermediate and much needed correction to the year's blistering uptrend for the metals and miners. If you believe, as we do, that the new bull run for gold and silver has at least several more years to run, then going against your emotions and adding to your position – or starting a new one – is the right thing to do.

Adam Hamilton sums it up well when he demonstrates a key trait which separates those who do well as investors, from the rest, who just hope, plan, and watch. Says Adam:

“Buying low is never easy. When selloffs snowball to major levels, there’s always a chance they will cascade even lower. So it’s very challenging psychologically to fight the thundering herd and buy when everyone else is selling. It feels terrible buying into capitulation selloffs, almost nauseating. The only way to build the fortitude necessary to do it is to stay exceptionally informed, which helps frame selloffs in context.”

Even after you've done the research and decided to participate, buying into price weakness against the herd and contrary to your emotions is not an easy thing to do. But time and again, some of the world's most successful investors have done just that. You might want to consider joining their ranks.

David Smith

MoneyMetals.com

David Smith is Senior Analyst for TheMorganReport.com and is a regular contributor to MoneyMetals.com. For the last 15 years, he has investigated precious metals mines and exploration sites in Argentina, Chile, Bolivia, Mexico, China, Canada, and the U.S. and shared his findings and investment wisdom with readers, radio listeners, and audiences at North American investment conferences.

© 2016 David Smith - 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.


© 2005-2019 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