Silver Cycles: $15 or $50+…What Next?
Background
Silver prices peaked in April 2011 and dropped about 60% over the next 25 months. Sentiment by almost any measure is currently terrible. Few are interested in silver; most have lost money (on paper) if they bought in the last two and one half years, and the emotional pain seems considerable. It reminds me of the years after the NASDAQ crash in 2000.
So will silver drop under $15 or rally back above $50?
To help answer that question, I examined the chart of silver for the last 25 years and identified several long-term cycles. Then I constructed a spreadsheet that attempted to model the price of weekly silver based on those cycles and a few assumptions.
Assumptions
- Use only long-term cycles – a year or longer.
- The weight assigned to each cycle is approximately proportional to its length. A 200-week cycle should be approximately twice as heavily weighted as a 100-week cycle.
- This is NOT a trading vehicle but a long-term indication of reasonable price projections based on past relationships. Those past relationships may or may not continue, even if they have been valid for over 20 years.
- Keep it simple. Do not over-complicate the model or aggressively “curve-fit” it.
- Prices are assumed to rise more slowly than they fall, so 62% of the cycle is related to the rising portion of the cycle, and 38% of the cycle is related to the falling portion of the cycle.
Data
| Low-to-Low cycles: | 65 weeks, 72 weeks, and 234 weeks |
| High-to-High cycles: | 102 weeks |
| Exponential growth: | 1/1/1990 – 6/30/2002: no growth – 0.0%/year |
| 6/30/2002 – present: 21% per year, calculated weekly |
Process
Find the beginning dates (lows) for the 65, 72, and 234 week cycles, and assign those beginning dates an index value of -1.0. Proportionally increase those index values from -1.0 to +1.0, and then reduce those index values from +1.0 to – 1.0, and repeat for each low-to-low cycle. Use the beginning index value on the 102-week high to high cycle as + 1.0. Extend the proportional increases on all time cycles from -1.0 to + 1.0 so that period takes 62% of the cycle length.
Assign each cycle a weight approximately proportional to the cycle length. Use a beginning value and calculate the exponential increase (0% or 21% per year) for each week, and then add or subtract the percentage changes for each weekly time cycle. Adjust the cycle index weights to obtain the best visual fit on a graph of actual silver prices versus the calculated price of silver.
Via: Silver Doctors
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Whistler Blowers, Insiders
What does this mean? it has no meaning! Basically he’s saying it would go up or down and he doesn’t know. Does SOME one who has an inside track to JP Morgan and Blythe Masters sound off, up or down. Larry Edelson, says there will be one more dip before it goes up. But everyone agrees there needs to be a catalyst so they can use that as an excuse.