Saturday, September 24, 2011

Gold and Silver correction: Where are we headed and is there a historical basis for the prediction?

Due to the volatility of both Gold and Silver this week I thought I would share some charts on both precious metals. I looked at the 5 year charts of both and then a chart as to what Silver did from 1912 to 1950, which covers the Stock market crashes of 1929 and 1938/1939. These were the Great Depression years and there may be clues to tell us what we might expect now.

First the current 5 year charts on Gold and Silver:


You can see the gains both had over the past 5 years as well as the recent loss from the highs recently achieved. Silver is much more volatile than Gold and with the gains that make one thrilled to own Silver, there is the extra pain of experiencing more dramatic loses as the chart shows.

Looking at the chart below on Silver from 1912 to 1950, you can see where each stock market crash precipitated a drop in Silver prices. So when the stock market drops so do Silver prices. Looking at the Gold prices during this period will not show anything because Gold prices were managed by the Gov't as to not fluctuate and many say that is the reason why we had the Great Depression because the Federal Reserve could not print money as we were tied to the Gold Standard during those years, unlike today where the Fed can just keep printing money which resulted in the price of Gold rising dramatically and pulling Silver with it.

If the past is any indication of the future, you can expect these metals to drop as long as the stock market in turn drops. If you believe we are going down much further in the stock market, expect more losses in these metals with more of a loss from Silver than Gold. If you think we are headed back up shortly in the stock market, buy Silver more than Gold and you will gain a higher percentage on your Silver holdings, if the market does indeed go up as you expect. I am still convinced the stock market will head lower over the coming weeks and months.

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7 Comments:

Anonymous Anonymous said...

Many months ago you were promoting ZSL, an ultra short silver ETF.

With a substantial rise in the price of silver having occured. ZSL has incured a major loss.

Are you presently holding ZSL?

12:06 PM  
Blogger Charles Amico said...

No, I am not currently holding ZSL. While I knew the recent drop was coming, I could not time it and when Silver climbed hyperbolically, I bailed as there was too much pain coming.

7:52 AM  
Anonymous Anonymous said...

Have always enjoyed reading your blog.
This comment has nothing to do with gold or silver but has to do with todays news.
Oil is presently trading in the $80 per barrel range. Regular gasoline, at the pump is selling for around $3.70 a gallon. A few years ago, when oil was selling for $80 a barrel, gasoline was over a dollar per gallon cheaper, than today. Probably in the range of $2.40-$2.50 per gallon.

With the same amount of money being taxed on oil,then and now. Why has the price per gallon not pulled back to a more suitable price?

It seems the price per gallon pretty much topped out at around $4.00, when oil was trading at well over $100 a barrel. We are now well below the $100 level,per barrel. Yet gasoline has not pulled back much at all.

The oil companies must be pulling in some massive profits! all on the backs of the beat down American consumer!

6:03 PM  
Blogger Charles Amico said...

Anonymous, I do not know why there seems to be a disconnect between Oil and Gasoline prices. But I will look into it and see what I come up with. If I find something I will post it on this Blog. Come back and visit again or better yet, be a follower. Thanks for pointing this out.

5:45 AM  
Anonymous Stock Market said...

very good post, i was really searching for this topic as i wanted this topic to understand completely and it is also very rare in internet that is why it was very difficult to understand

thank you for sharing this.

Regard

Stock Market

1:45 AM  
Anonymous Anonymous said...

Oil is used for a lot more than just gas to fuel your car!

5:09 PM  
Blogger Netai Biswas said...

I am not much of a Fibo Goldtrader as I view the pair differently and it does not
always react to such studies as one might like. More irrational, news and heavy inverse correlation to the USD.

11:05 AM  

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