Silver, Equity And Currency Turning Points: Silver Has Seen Its Lows

March 1, 2015

Investment: asset classes turning points

Silver has seen its lows, and the Dow may blow off to 19700 by the end of the month, if it were to actually do so.  I previously thought that such an event could occur by yearend, but everything is really stretched, almost as if ''they'' are waiting for particular political events to pass (not today's discussion).

In certain ways, the Dow looks like the Nikkei did at the end of 1989, when it blew-off from 36,000 to 39,200 on the first day (a Saturday) of 1990.

In the 4th-quarter, I wrote of a silver bottom that would be in place before yearend, and that its last shot down, which had spiked silver volatility higher (4-year VXSLV chart), was a precursor to a resumption of the secular bull market which began back at the beginning of the century.

The correction that began this week to the all-important 25-level on the VXSLV may be underway now and could conclude abruptly at any time. As I warned (see 2nd link above), the best way to time entry into the iShares Silver Trust (ARCA:SLV) should be via proper timing of the VXSLV. And that ended up being the case.

The SLV bottomed first, and buying after the VXSLV lift-off was ideal. Premiums were higher, but the lower metal level was the offset.

Regarding the above-linked 4-year VXSLV chart, please note the eruption that occurred with the SLV at $49 in April 2011. As both go in the same direction, the double-whammy will profit the patient long term premium-holders in a historical fashion.

So, as also discussed last quarter, volatility (time premiums) will revert to trending WITH silver, as opposed to asymmetrically to it (as was the case during this just-completed post-2011 bear cycle).

This makes sense, I have argued, since there is the law of diminishing returns on the downside, while there is no limit to the upside.

The 1-year daily SLV chart reflects a likely completed decline in the short term (intra-month), as the stochastic is plainly oversold and turning up, albeit with no positive diverges as yet; none are required, however.

SLV 1-Year Chart

This is particularly so when contemplating silver's countless and previously enumerated positive long term fundamentals and their corresponding charts (see charts below).

This year's move up represents a mere blip on even a 10-year SLV chart. Here, the stochastic (not shown) are en route to, but are not yet oversold.

It is in no way necessary for all of the indicators to line up, but if they were to do so, including a positive divergence in the daily chart (included above), silver would retest the $15-level again before resuming the advance. (But would that matter anyway?)

Moreover, it is yet another matter looking at a 47-year monthly silver chart.

The monthly stochastic (not shown) has turned up from oversold and the price chart clearly shows that the wave commencing now is Wave-3 (since a wave-3 cannot overlap a wave-1, which would not have been the case had silver held over $20; then, silver's long term chart would have still been open to interpretation, according to Elliott).

Note as well the critical support level to which this exaggerated silver decline has traveled; the latter is so historically typical.

Throw in a beautiful testing of a decade-long uptrend channel, and we see the stuff of long term investors' dreams of lasting wealth creation.

All taken together, the post-2011 decline has ended, and 2015's US hedge fund accumulation is merely taking silver off the market to allow for the major eruption later this year, as no sellers will get in the way; the sole international hold-outs have been the US managers who, predictably, have changed sides with the advent of 2015, as the hedge fund managers seek what didn't work before.

Precious metals respond to the hedge fund manager's question, "What hasn't moved, and where is the major potential going forward?" So, now, Asia, Europe, the short covering bullion banks AND the hedge fund managers are ALL on the same side.

The latter is the recipe for eruption.

In 2007, I advised a 200% position ~$11.25, exiting half at $15.29 on Jan. 6, 2008. This time the bull market is farther along, so the levels to which silver will attain, and the speed with which it will get there, lays 2008 - 2011 to waste.

$150 - $500 over the next 5 and 10 years.

Separately, over the long term, SKGS reports enjoyed good fortune in the currencies, including the yen and euro, turning bullish or bearish as the case may be, according to who I felt would be next in line to print. So,...

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Courtesy of

Peru became the world’s largest producer of silver in 2012.