One View of The Big Picture in Gold & Silver

April 6, 1997

Most goldbugs are convinced that the day of come-uppance for paper currency will emerge, as it does periodically, and that gold will shine as the true money once again. Even if such a return of gold's dignity and majesty is short-lived, it will be both sweet vindication, and remuneration, for those whose bets were on the king of metals. The question, therefore, among the faithful, is always "when?." This question invariably takes a back seat to the second most popular query regarding gold price fluctuations: "why?"

As an astrologer who is also a goldbug, the dear visitor may rest assured that I have expended much energy and gray matter in the cross referencing of the art of analyzing celestial patterns, and price patterns, with the art of investing in gold. Far be it from me to repeat here the usual fundamental and philosophical reasons why the paper society will go blowin' in the wind someday. Others have done it more eloquently and instructively than I could ever hope to. What I can bring to the table in our concern for the precious metals is one humble seeker's obscure technical findings concerning these markets.

I'll try not to confuse you unfairly with my astrological discoveries, so let me rather lapse into some long-term price chart observations instead. I am not a strict Elliott Waver, but I would like to postulate that in 1934, with the severance of gold from currency backing in the United States, gold has begun a monster bull market that will not top until the entire monetary structure we have known during most of this century is washed away.

Indeed, I believe that the kickoff of that grand bull market began in 1934, and that the First Wave of a gigantic 5-wave pattern crested in 1980. Since 1980 the price of gold has traced a huge abc correction in a giant ongoing Elliott Wave pattern. The end of the first c wave of that correction came in March 1985 at $285 an ounce. It represented Wave 2 of 5 waves. There are 3 more to come. Gold has not gone lower since then, so the activity since the '85 bottom has been either an "x-wave," or some sort of base formation preparatory to wave 3 of this giant gold bull. Orthodox Elliott Wave theorists might have a clearer insight here.

This supposition holds unless the gold price declines below $285. I suspect, based on stressful astrological confirmations that will relent after winter 1997, that the corrective extension, or base, as the case may be, will complete around that time, and in 1998 a fresh upwave, giant wave 3, will emerge. Just add up the years it took waves 1 and 2 to come in - wave 1 from 1934 to the '80 top took 45 years. If our projection is right, add a correction wave 2 of 17 years. Another wave up starting in '98, wave 3 of 45 years, and a correction of that in another 17 years, would bring us to the year 2059. Finally, the Fifth and final wave of the grand bull market would add another 45 years and put us at the ultimate monster peak in 2104.

Whether one believes in astrology
or not, take it from me this is
a very important conjunction for
silver, and will likely denote
significant price activity
one way or the other -

Obviously this is theoretical, though we have some marvelous astrological confirmations that match in that very year. I just want to paint a broad brush picture of what seems to be unfolding on a grand scale. Perhaps this is a prognostication that can also serve as an inheritance.

Silver is a wonderful clue to the metals in general, of course, and current astrologicals show an important planetary aspect that occurred in 1968 repeating itself this summer. In July there will be a Saturn conjunction (alignment) with New York Stock Exchange's horoscope Moon. Silver is the universally acknowledged metal related to the Moon in all the traditional and historical metaphysical systems of the world. Whether one believes in astrology or not, take it from me this is a very important conjunction for silver, and will likely denote significant price activity one way or the other - probably marking an intermediate term silver peak, though it could be a bottom as well. Saturn's cycle is roughly 26 years. When this last happened to the exact degree, in 1968, silver just about doubled in a few months. Of course, past results are no guarantee of future activity in astrology as well as market prognostication of ANY kind. But this seems an astrological "no-brainer" as far as likely action in silver is concerned. I'm betting peak strength here.

Regarding Silver, however, a look at the long-term price chart is in order for an overview on this market. A number of things reveal themselves. First, it should be noted that the price is still apparently being contained by a downtrend line connecting the 1983 and 1987 rally peaks (even factoring in time/space trendline aberration). These were descending tops in a monster bear market for silver since the blowoff top in '80 at $50. The bad news is silver has not broken out of that containment, though it is "pressed up against it." That is why Silver has declined so precipitously in the past few weeks for "no apparent reason." Price simply hit this overhanging stress line, and was not ready to crack it. This has been a perplexing mystery to many traders, and no doubt a painful one.

The good news is that a rally beyond roughly $5.20-5.25 at this point would break silver out of this 13 year containment. This would have enormous long-term bullish implications. If this does not happen relatively soon (in a month or two) price could decline to 4.08 -4.09, where it will encounter the rising support line connecting the bull move base bottom of 1.35 or so in 1971/72 and the double bottom around 3.50-3.65 in 1991/92. A decline below this trendline would imply a true deflation, and have staggering implications for everything we hold to be "reality." This seems to be the least likely scenario. It appears, if one attempts to reconcile the "catch up" necessary for the tangibles to express the growth of money and credit (paper) in the world since the silver bear began in 1980, that silver (and gold) is building a massive base for a new bull.

The good news is that a
rally beyond roughly
$5.20-5.25 at this
point would break
silver out of this
13 year containment.

The signal in silver will be a rise above 5.20-5.25, which may appear inconsequential, but would free the price to begin to feel out a new major channel up. The first attempts will be halting and lame, compared to the eventual liftoff to come. The exuberance of such a stealth breakout would not be irrational or undeserved for this downtrodden, yet noble asset. But it might be short-lived. A retracement and test of that breakout might frustrate silver bulls once more, late in 1997, but would set up the eventual march to $16 to $18 in the next wave up, which would likely be the first of 5 in a new bull swing.

There can be no doubt that the next bull market in the metals will be a long-term continuation leg (3rd wave) of a grand bull begun in the 1930's. Since that time, no nation on earth has backed its citizens' currency with gold. A cultural/financial dislocation of serious magnitude will be the catalyst and underlying cause of the next wave of this bull. The result will be that gold and silver will be eventually perceived as money once again by the public, even if only for a short time. It may be all the time patient goldbugs need.

Most silver is produced as a byproduct of copper, gold, lead and zinc refining.

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