Replies to post #8866 on *** ALL THINGS MONEY >>>> ATM ***

[Pro-Life]

Silver is Approaching Stage Two of its Bull Market

http://www.kitco.com/ind/Turk/turk_feb142011.html

Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one. http://www.fgmr.com/end-of-stage-is--rapidly-approaching.html Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980. My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.”

I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market http://www.fgmr.com/stage-two-of-golds-bull-market.html , just two months after gold broke above $1,000. Focusing on the change in prevailing sentiment, I noted how differently gold was being treated. “During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential. Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one. Look how many people are writing and talking about gold. Gold has moved from apathy and neglect – stage one characteristics – to growing attention. But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher. These are exactly the responses one should expect to emanate from stage two.” I concluded by noting that at some unpredictable point in the future, gold will enter stage three “when gold no longer is relatively good value”.

I did not make any mention of silver in the above two articles. It too has three stages, but silver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50. It was an astounding 93% decline from its January 1980 peak of $50. But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.

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This chart shows a massive accumulation pattern, marked by the green lines. This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter.

From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out. At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force. Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb. It was classic stage one action, but here’s the important point.

Silver is still in stage one. It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.

I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010. http://www.fgmr.com/outlook-for-2010.html

Admittedly, I was a little early with my forecast about when gold would enter stage two. So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year. Regardless of the accuracy of my timing, one thing is clear. Because it is still in stage one, silver remains good value.

by James Turk,
February 14th, 2011

*****

James Turk is the Founder & Chairman of GoldMoney.com <http://goldmoney.com/>;. He is the co-author of The Collapse of the Dollar <www.dollarcollapse.com> and publisher of the Free Gold Money Report<>http://www.fgmr.com<>;.

Copyright © 2011 by James Turk. All rights reserved.

[greengold]

I just wanted to thank you for all the links you sent me a couple of months ago and for this current line of thought. I have been studying different sites and learning as much as I can about chart reading. I continue to read almost all the posts and follow the links provided, there is so much info it is almost too difficult to read everything!

I would also like to thank AcousticHockey for his timely post on the sticky at top about what he has learned trading options. Before I read it, I was ready to just jump in and start trading, but know I am trying to be patient and continue to learn more about reading charts, especially seeing support / resistance levels as he mentioned.

I am a novice when it comes to trading stocks, ( I think I have about a 50% track record for short term trades ) and have yet to trade my first commodity. I think I am ready for the next step and that is putting together a plan on WHAT I want to trade on, correct? I would think that with everyone’s varied backgrounds ( mine, which has no formal experience in trading ) that at least some of the traders have set up some kind of plan that they follow.
I have an account set up for options trading now, but have not set up level 2 trading which from what I have read on different sites lately is imperative to successfully trading in options.

I have also talked to a business man that I met through a friends mutual acquaintance and he is willing to give me some of his historical data, which are commodity trades that he has done for about six months. I think this would be useful if put into some sort of spread sheet and then looking at the charts to try to find certain triggers or trends. Do you or anyone on the board recommend any type of spreadsheets to keep track of trades or just using the trading software that I already pay for, which in my case is E*TRADE?

I welcome any input from the members on this board and want to thank everyone for sharing their thoughts on the way they have developed their trading techniques over the years. It is a great learning tool for me and I am sure all the other lurkers on this board, which I intend to change to contributor as I progress through my trading experience.
Thanks