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« Hecla Mining Company Meets Resistance | Main | A Get Together with Doug Casey and Rick Rule »
Sunday
Mar092008

Silver: Reached Our Target, What Next?

We predicted a “major rally” in silver that we thought would begin at the end of the summer. Silver has risen more than 70% since the end of the summer, a terrific gain and of course we are pleased that we made a good call.

Silver: Reached Our Target, What Next?

We have seen $20 silver coming from a long way off as longer term readers of The Silver Prices Newsletter will recall. The following are examples of what we have said regarding our target of $20/ounce. Everything we say and do is published on this website and therefore our investment and trading record is available to anyone for scrutiny.

Silver is hovering around the $13.0 mark and in our very humble opinion it won’t be there for very long. We are looking for $20.0 and fairly soon, followed by a run at ‘Bunker Hunt’ levels or if you are of the younger generation, $50.0.
November 10th 2006

The scene is set for silver to move a lot higher...We are still expecting to see silver hit the $20.0 mark...
March 23rd, 2007

We are of course still very bullish long term on silver prices and we maintain our long standing target of $20 per ounce.
July 1st, 2007

This adds to our confidence that Hecla will be one of the best performing junior silver producers as silver heads towards our target of $20 per ounce.
July 4th, 2007


We are sticking with our target of $20 silver prices and we expect to see these price levels by year end.

July 30th, 2007

When our target of $20/ounce for silver is realised, we will see Hecla’s profits going through the roof and the same thing will happen with the stock.

August 2nd, 2007

So if and when gold gets to $1000/ounce and the ratio remains the same then we have $1000/ounce for gold divided by the current ratio of 52 equals $19.23/ounce, very near our $20/ounce target price for silver.

August 6th, 2007

Silver is currently traded for about $12.80 per ounce, $7.20 away from our target of $20/ounce.
We think a great bull rally will being in silver and silver stocks at the end of the summer.

August 14th, 2007

The next few days could be very interesting indeed as we may witness the last bottom in silver stocks before the next large rally that we see beginning some time toward the end of the summer.
August 16th, 2007

Of course we still maintain our long term bullish stance on silver prices and our target of $20.00 per ounce.
As readers of The Silver Prices Newsletter will remember, we see a rally in both gold and silver starting at the end of the summer.

August 28th, 2007

We are still holding on to a core position in SSRI though, with the view that this stock is moving a lot higher in the future as the silver bull market continues to $20.
October 25th, 2007

However silver itself will be volatile in the near term and we are not increasing our position at present, but looking further out we still expect silver to take a run at $20.0 before too long.

February 13th, 2008



We had thought we would see $20 silver by then end of 2007, but silver hit the $20 mark 59 days later, so we were a bit off there, but not by much. This major rally in silver has been caused mainly by a deteriorating US dollar, which we predicted would fall into “the abyss” once it broke 80 on the USD index, and that is what has happened. Please click here to see the article we wrote on July 16th 2007 where we said:

“We are literally about half a point from seeing the US Dollar break its single most important support level. Here, eighty is the magic number, watch the USD fall below 80 and you have witnessed the beginning of the end of the dollar and the dawn of a terrific run in gold [and silver] prices that will take the yellow metal to an all time high in a surprisingly short period of time.”

Now that silver has achieved our target, we must assess the situation again and try and determine where silver prices are headed next.

In the long term we are overwhelmingly bullish on silver prices and we see $100 silver as a very strong possibility. As the mainstream market and US dollar worsen, silver and precious metals will be increasing used as a safe haven by concerned investors, particularly when rampant inflation kicks in.

For the intermediate term, we see a serious correction in silver and in commodities in general across the board coming this spring. Precious metals have gone on a magnificent run recently and although we think that they will continue to do well, we must remember that nothing goes up in a straight line and this spectacular rally must end in a correction of similar magnitude.

Our short term outlook however is that there is still some juice left in the silver bulls engine. We think silver prices will continue to tick up in the coming weeks, until forming a peak within the next two months.

By subscribing to The Silver Prices Newsletter you can stay updated on our trading signals and investment ideas, subscribing is completely free of charge, just click here and enter your email address. When we feel silver is forming a top, we will be giving sell signals on our silver stocks so subscribe now to receive these signals.

If silver reaches a point where we feel it is worth shorting, we may use a portion of the cash generated from selling silver stocks to build a short position in the market.
We prefer trading silver as opposed to gold, especially on the downside, as silver tends to correct harder and faster than the yellow metal.

We have successfully traded silver with financial spreadbetting on the futures market before and we hope to replicate this success in the future. For those who are new to our newsletter and website, on the 1st July 2007 we predicted a short term upwards move of 50 cents in silver prices and within 10 days, silver was up 62 cents.
Also on the 20th August we signalled a BUY on silver both for the long term and for a short term upwards move of $1.00. Within 30 days, silver prices gained a dollar, and we closed our trade for a profit of 100% in 30 days.


We will finish with the chart below (please click to enlarge) which shows how silver usually undergoes a serious correction after such dramatic rallies.

Silver Longer Term Chart 090308
(Click thumbnail to enlarge)

If you have any thoughts or questions on the silver market, please don't hesitate to post a comment below.

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Reader Comments (7)

both silver and gold the metal has been on a tear since the august lows, but the gdx up only 25% and small cap gold and silver stocks have gone nowhere. do you forsee any catch up rally in the small caps before the sell in may and go away mantra is before us?? thx

March 9, 2008 | Unregistered Commentermark doyle

I read and appreciate your web page on silver.One quick question: The previous corrrections in silver occured when the economy was much stronger, the USD worth much more, more silver was available. Presently with economy in recession, the USD sinking,the war in Iraq so expensive and worrying, massive job losses, much less above ground silver, with all the above increasing every day one might consider the thought there will be no deep correction only a mild one or maybe not even have one? Thank you in advance.

March 9, 2008 | Unregistered CommenterW Lucas

I'm wondering when will be the next good buying opportunity to pick up some more silver...

March 9, 2008 | Unregistered Commenterbob jones

Team, Good questions and they most certainly concern us. We are working on it and will post our thoughts and actions soonest.

March 9, 2008 | Unregistered CommenterSilver Prices

I too, really appreciate your articles and have benefitted from your analysis. I am a futures silver player and have seen this spring run-up in silver three times now, noting it corrects in April or May. I have been so bold as to short it recently (@ $19) only to get stopped out at 21. So now I am gun-shy but do believe it will correct eventually. What are the indicators you will look for at a top?
Thanks, Joe

March 9, 2008 | Unregistered CommenterJoe Ackerman

Hey Joe Ackerman,
How do you go about shorting silver? I know it is readily available to buy, but what methods are used to short it?

Thanks ...

March 11, 2008 | Unregistered CommenterQuattro40vGuy

I am also tempting to short silver. The prices increased 30% in 2 months ? Too fast. High probabilities to fall. Some analysts Bloomberg (who actually did not recommend put money into futures) commented on that after stock went down in december the speculators jumped from stock into futures, oil, gold, silver, etc. They drive the silver price right now and that is why silver increased. We have to watch for price stabilization. When the price stops growing, it is very probably the speculators take their money out of silver, and put it on another thing, this will make price to fall, so we can buy.
Otherwise, if you go long, do not hold silver for more than 24 hours.

March 15, 2008 | Unregistered CommenterNikolai

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