Gold and silver - are we here?

Discussion in 'Silver' started by Threadneedle St, Apr 19, 2015.

  1. Threadneedle St

    Threadneedle St New Member

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  2. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    If you believe in that chart, you probably believe in God. Good luck with both.
     
  3. Threadneedle St

    Threadneedle St New Member

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    I believe in cycles.

    I believe in bull market stages that tend to repeat thanks to human behaviour.

    I believe that gold and silver are still in a bull market cycle. The money printing hasn't stopped last time I checked. The world debt levels haven't magically reduced last time I checked.

    I believe that this chart is possible, nothing surprises me anymore.

    At the very least you must realise property and sharemarkets are very high and that precious metals are very low.

    Is not the key to becoming wealthy buy low and sell high? Not buy high and hope it goes even higher.
     
  4. Jislizard

    Jislizard Well-Known Member Silver Stacker

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    The trouble with the graph is that it is just an illustration, it is meant to describe someone's theory as to how they think the cycles run. They may well have put a lot of effort into it and done a ton of research. It was probably originally published with a disclaimer along the lines of "this is just my theory, what do you guys think?"

    However, I have seen it since then with lots of different graphs superimposed over the top of it.

    You can stretch the time-frames and stick all sorts of scales on it but at the end of the day, you won't know where on the graph we are at the moment until many years in the future when we can look back on the whole picture. I personally think we are to the far right of the picture, coming out of despair and returning to the mean after a nice little rise that got everybody excited, however, I am not willing to defend that position over much as we could just as easily be anywhere else on the picture.

    Does anyone know the story behind the illustration? I only came across it in the last 5 years but I have seen it quite a bit since then, someone must have made it and they must have been quite credible because it has been widely accepted by the looks of it.
     
  5. SpacePete

    SpacePete Well-Known Member Silver Stacker

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    The first time I ever saw it was several years ago as an illustration of the housing market.
     
  6. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    My best guess is that it is from Dr Jean-Paul Rodrigue, Dept of Economics & Geography Hofstra University
     
  7. SpacePete

    SpacePete Well-Known Member Silver Stacker

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    Wow, you may be right. Page down a bit on this link: Bubbles, Manias and Bears, oh my... (01/18/2006)

    Has descriptions of each phase.
     
  8. Miloman

    Miloman Active Member Silver Stacker

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    Eventually if inflation keeps occurring, it will happen just will take time.... and I mean time.

    Go back to 1910 and enjoy a bus ride for a penny. Today it's gone up a couple hundred times.
     
  9. Court Jester

    Court Jester Well-Known Member Silver Stacker

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  10. Threadneedle St

    Threadneedle St New Member

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    From the man himself.........


    The different phases in a bubble are backed up by 500 years of economic history. Each time the situation is obviously different, but there are always a lot of similarities. The situation applies pretty well to the current real estate bubble, which is rapidly unfolding as these lines are written. Simplistically four phases can be identified:

    1) Stealth. Those who understand the new fundamentals realize an emerging opportunity for substantial future appreciation, but at a substantial risk since their assumptions are so far unproven. So the "smart money" gets in, often quietly and cautiously. This category of investor tends to have better access to information and a higher capacity to understand it. Prices gradually increase, but often completely unnoticed by the general population. Larger and larger positions are established as the smart money start to better understand that the fundamentals are well grounded and that this asset is likely to experience significant future valuations.

    2) Awareness. Many investors start to realize the momentum, bringing additional money in and pushing prices higher. There can be a short-lived sell off phase taking place as a few investors cash in their first profits (there could also be several sell off phases, each beginning at an higher level than the previous one). The smart money takes this opportunity to reinforce its existing positions. In the later stages of this phase the media starts to notice and those getting in are increasingly "unsophisticated".

    3) Mania. Everyone is noticing that prices are going up and the public jumps in for this "investment opportunity of a lifetime". The expectation of future appreciation becomes a "no brainer" and a linear inference mentality sets in; future prices are a "guaranteed" extrapolation of past price appreciation, which of course goes against any conventional wisdom. This phase is however not about logic. Floods of money come in creating even greater expectations and pushing prices to stratospheric levels. The higher the price, the more investments pour in. Fairly unnoticed from the general public caught in this new frenzy, the smart money as well as many institutional investors are quietly pulling out and selling their assets to eager future bag holders. Unbiased opinion about the fundamentals becomes increasingly difficult to find as many players are heavily invested and have every interest to keep the appreciation - "the game" - going. The market gradually becomes more exuberant as "paper fortunes" are made and greed sets in. Everyone tries to jump in and new investors have absolutely no understanding of the market, its dynamic and fundamentals. Prices are simply bid up with all financial means possible, particularly leverage and debt. If the bubble is linked with lax sources of credit, then it will endure far longer than many observers would expect. At some point statements are made about entirely new fundamentals implying that a "permanent high plateau" has been reached to justify future price increases; the bubble is about to collapse.

    4) Blow-off. A moment of epiphany (a trigger) arrives and everyone roughly at the same time realize that the situation has changed (like the Road Runner Coyote realizing he is about to fall after walking on thin air for a few seconds). Confidence and expectations encounter a paradigm shift, call it a reality check, not without a phase of denial where many try to reassure the public that this is just a temporary setback and that anyone saying otherwise does not know what he is talking about. Some are fooled, but not for long. Like a directionless herd many try to unload their assets to a greater fool, but takers are few; everyone is expecting further price declines. The house of cards collapses under its own weight and late comers (commonly the general public) are left to hold the bag while the smart money has pulled out a long time ago. Prices plummet at a rate much faster than the one that inflated the bubble. Many over-leveraged bag holders go bankrupt, triggering additional waves of sales. There is even the possibility that the valuation undershoots the long term mean, implying a significant buying opportunity. However, the general public at this point considers this sector as "the worst possible investment one can make in his life". This is the time when the smart money starts acquiring assets at bargain bottom prices.

    Bubbles can be very damaging, especially for those who arrived late with the hope of getting something for nothing. Even if they are inflationary events, the outcome of a bubble's blow off is very deflationary as large quantities of capital vanish in the wave of bankruptcies they trigger. Historically, they tended to be far in-between, but over the last decade we have experienced the largest bubbles in human history back-to-back; the stock market (which deflated in 2000) and the real estate (which is likely to deflate in 2006).
     
  11. Threadneedle St

    Threadneedle St New Member

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    The reason I like the chart is that it's backed by 500 years of human behaviour, the rich always get in first and the masses always arrive late to the party, then end up getting creamed.

    This chart can apply to any bull market.

    Nick laird has just superimposed the gold and silver prices over the top to give a potential look at what could unfold if the bull market in precious metals is only just around half way through.

    I happen to believe the bull market for precious metals will likely end when the Dow: gold ratio is close to 1:1, and we are no where near that so it leads me to believe we have that 3rd and final stage ahead of us which will bring that ratio close together.
     
  12. Jislizard

    Jislizard Well-Known Member Silver Stacker

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    That's a pretty specific 'guess' :D

    Didn't even look to see if he had signed his work, I will have to go back and see if the other ones were signed as well.
     
  13. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Pirocco, one night in our dreams, was on the other side of the world, with too much time on his hands, trying to make sense of all these numbers he had extracted from numerous sources, put them in an Excel spreadsheet, pushed the "graph"tab, and voila!
     
  14. RetardedMonkey

    RetardedMonkey Active Member Silver Stacker

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    Bitcoin followed that chart quite well actually.
     
  15. Liquid

    Liquid New Member

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    Indeed it did

    Silver was as high as $806 in the year 1477 AD, but now only $16 in the year 2015 AD

    [​IMG]
     
  16. stackingstudious

    stackingstudious New Member

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  17. Aureus

    Aureus Active Member Silver Stacker

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  18. SpacePete

    SpacePete Well-Known Member Silver Stacker

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    Not to mention the fact that Chinese silver stockpiles have surged recently due to decreased demand resulting from their weakening economy. This is a strong bearish signal.
     

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