Excitement Returns to Silver Market
Source: Seeking Alpha, Roland Watson (6/1/09)
". . .consider your increasing silver hoard and expect great things."
After a grinding bear market of 23 years, silver entered a new bull market on 21st March 2003. This bull will last 20 to 30 years as we enter an age of increasingly greater inflationary forces.
Our expectation is that this rally will approach the March 2008 highs of $21 but not decisively take them out. This is what we call a wave B rally. Wave A took 8 months to complete and this wave B will likely take as long to complete. If the wave B began in November 2008, we would expect it to finish sometime this summer.
After that silver will experience another multi-month drop, which will take it possibly down to the low $10s at worst before the final death throes of the wave 2 finish to usher in wave 3.
The fundamentals to propel wave 3 will be similar to wave 1 as the economy recovers, silver demand picks up industrially but again inflationary pressures begin to bear as commodity demand from China and elsewhere tightens. The inflationary effects of the worldwide credit crunch bailout will also finally filter through but we also expect Peak Oil to finally and decisively appear and oil to breach $200+. Wave 3 will occupy most of the next decade.
The biggest move will be the final wave 5 blow off, which will happen in the 2020s. This will be the equivalent of the 1980 blow off and silver will be in the hundreds of dollars as peak silver takes hold and the U.S. dollar sinks under the combined effects of Baby Boomers bankrupting the Medicare and Medicaid systems.
You will just not believe how silver will perform then, but for now it is enough to consider your increasing silver hoard and expect great things. In the meantime, silver continues to whipsaw and entertain its old friend volatility in this deflationary correction wave 2.