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Silver’s annual performances have been erratic in this

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NYBob Member Level  Saturday, 01/12/13 09:22:00 PM
Re: Montanore post# 849
Post # of 882 
Silver’s annual performances have been erratic in this bull
too as this final chart shows.
Sometimes it is up big, sometimes it is down big.
But even large down years like 2008’s stock panic don’t
prematurely end silver’s secular bull.
It bounces right back as sentiment recovers, something to
remember today in this current environment filled with silver
fear, despair, and bearishness.
Silver’s gains aren’t smooth.




But there is definitely a mean-reversion tendency in
silver’s returns.
Weak years are generally followed by strong years, and
vice versa.
After 2008’s stock panic crushed it,
silver soared 52% in 2009 and 83% in 2010.
And those incredible years led into
the high consolidation of 2011 and 2012,
with their 10% loss and 10% gain.
So if silver’s secular bull is indeed alive and well,
it is certainly due to surge once again in 2013.


And there’s one more thing to note in this real-silver comparison. Today’s secular silver bull, while erratic, is much more consistent than the 1970s one proved. Silver’s gains have been more gradual, the periodic sharp surges as greed waxes excessive haven’t been extreme like the 1974 example. This implies today’s bull has a much larger investor constituency deploying capital more gradually over time.

Thus today’s bull is considerably more robust, it has a stronger foundation than the 1970s one. This supports the thesis that today’s secular silver bull will ultimately prove larger than the last one. The better the foundation, the more investor capital deployed before that crazy popular-speculative-mania phase sets in, the higher silver can potentially rocket when the general public finally comes storming in.

So despite all the silver bearishness out there today spawned by silver’s recent weakness, its secular bull looks far from over. Popular speculative manias cap secular bulls, and though the spring-2011 upleg was strong it was nothing remotely close to mania-caliber. Silver is going to see much higher highs, dwarfing April 2011’s near $50 real, before this secular bull has fully run its course and finally gives up its ghost.

Interestingly, silver is already in a young new upleg that most traders refuse to see because they are blinded by today’s bearishness. While this metal was pounded back down near $30 in December, just under its 200dma, it spent much of last summer languishing around $27. Silver is slow to gather steam, with gradual early-upleg buying slowly building momentum into the exciting large late-upleg surges.

And the Fed’s new QE3 Treasury monetizations that are just starting this month are wildly bullish for silver. This metal has always been a go-to asset in inflationary times. That last mighty upleg that peaked in April 2011 happened to be largely driven by the Fed’s last major inflationary campaign, QE2. So 2013 is shaping up to be an amazing year for silver, and probably even better for the beaten-down silver miners.

When traders are bearish on silver after its slumps, they just abandon the stocks of the companies that bring it to market. The silver stocks plunge to deeply-undervalued levels relative to silver, they are pretty much left for dead. This creates great opportunities to buy low for brave contrarians who understand silver’s bullish fundamentals and aren’t spooked by temporary weakness. The newest persists today.

Most silver stocks are trading as if the bears are right, as if silver is doomed to grind lower from now to the end of time. But in real terms today’s secular silver bull looks far from over, and silver is early in what is likely to prove its next major upleg. So the excessively gloomy psychology plaguing silver stocks today won’t last. Contrarians who understand this have been buying cheap silver stocks in recent months.

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The bottom line is a real comparison shows silver’s current secular bull is far from over. This metal’s latest interim high a couple springs ago was relatively low in real terms, and resulted from an upleg that was nothing like a popular speculative mania. And secular bulls don’t end until the general public falls in love with that asset and starts flooding in. Silver hasn’t seen anything like that for several decades.

The current bearishness is merely a typical psychological response
to silver’s recent weakness.

When prices fall, traders start to believe they will keep falling
indefinitely.

So they look for bearish theories that rationalize their beliefs.
But succumbing to this groupthink is a grave mistake.


Broader perspectives reveal silver’s secular bull is far from
over, creating a great buying opportunity for contrarians today.


by Adam Hamilton, CPA
January 11, 2013



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God Bless



My opinions are my own and and DD I post should be confirmed as unbiased
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