Post Credit Crisis Performance Update for Silver

Published: January 18, 2012

17 January 2012

Just to let everyone know how the post-credit crisis recovery has been coming along, here’s a chart for gold, silver and the Dow Jones indexed to 1.00 from their lows of 2008-09. Gold and silver bottomed in October 2008, while the Dow Jones took another five months to hit its bottom (March 2009). This by itself is a remarkable indication of the strength in precious metals, especially silver. Remember, at silver’s credit crisis low, it had declined by 58% while the Dow Jones bottomed 54% from its October 2007 high. Silver and gold has gone on to make new, and significant highs after their October 2008 bottom, while the Dow Jones has yet to exceed it last all-time high of October 2007. That seems an important fact to me.

As is evident in the chart above, anyone who purchased silver before August 2010 has done substantially better than those who purchased gold or blue-chip stocks, such as the companies in the Dow Jones Industrial Index. Oddly, you never see this point being brought to the public’s attention on CNBC.

Using the Bear’s Eye View (BEV) chart gives us insight into exactly what’s been happening to the price of silver since it began its bull market in 2002. Remember, a BEV chart is a study of new highs (BEV Zeros) and corrections, in precise percentages, from previous new highs.

Here is something to note about silver; since the start of its bull market in 2002, every time silver has corrected 15% or more, it’s taken over a year before it broke out to new highs of the move, as seen in the Bear’s Eye View chart below. Whenever silver has corrected more than 30%, it took over a year and a half before it made a new high of the move. The deepest correction since 2002 occurred during the Credit Crisis (58%), after which silver took over 30 months to make a new high. The Chart below gives the specifics in trading days.

In our current correction, silver dropped 44% from its last BEV Zero of April 2011, making this decline the second deepest in a decade. Looking to the past to project silver’s future, silver should not be expected to make new high until after April 2013, over a year from now; but I’m more optimistic than that.

One thing for sure, should silver see a new high of the move before September 2012, and particularly before April 29 this year, something historic will have been achieved in the silver market which promises superb gains for silver in the years to come. Will this happen? After the default of MF Global & and the CME last October, it should have happened already. Why anyone would still trade paper metal is beyond me, but they do. And now Canada too seems to have a broker dealer in the futures market that has used their client’s funds, without their’ knowledge or consent, for the house’sbenefit: Barret Capital, as reported in Zero Hedge.

Maybe I’m wrong, but I expect it’s only a matter of time before London and Europe will have some bad news for speculators in gold and silver’s paper markets. And there is no worse news in a market than discovering the trust between client and broker has been violated; that the trustee of one’s funds used your money as a slush-fund for their profits, while sticking you with the house’s losses, as regulators stall for time. If Washington’s political class doesn’t take steps to punish their favorite nabobs with criminal prosecution: yes I mean Jon Corzine and all others who have crossed this line, it’s only a matter of time before the NY financial markets see a historic-capital flight from our shores that will leave the American financial media with little to talk about but what money is doing someplace else.

Mark J Lundeen
Mlundeen2@comcast.net
17 January 2012

Article Title	Source	Last Comment Date
Outstanding Performance in the XAU - Important Update 0 comments	Market Pendulum	October 29, 2011
Lawrence Lindsey Blames YOU for the Credit Crisis Plus my Weekly Market Update 0 comments	Mark Lundeen	October 20, 2011
Gold, Silver & the Dow Progress from the Lows of the Credit Crisis 0 comments	Mark Lundeen	February 13, 2011
Nelles, Eitel See Huge Litigation Wave Post Credit Crisis: BLAW 0 comments	Bloomberg TV	December 10, 2010
News Hub: Performance Pay Worse After Crisis-Study 0 comments	WallStreetJournal - Business TV	November 30, 2010

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Post Credit Crisis Performance Update for Silver

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