silver's time

  1. 9,081 Posts.
    Yet another bullish article on silver:

    (I don't think that it will be long before we have a major breakout and the long-awaited bull run commences)

    "It's Silver's Time!


    David Morgan
    Saturday August 16, 2003

    Quote: "If the credit expansion is not stopped in time, the boom turns into the crack-up boom;the flight into real values begins, and the whole monetary system founders."
    Mises

    One of the most difficult tasks for anyone in the financial markets is timing. As far back as twelve years ago, I looked at the annual silver survey from the CPM group and although I did not know about leasing at the time, I was baffled by the low price of silver.

    At that time, I simply thought, when do we run completely out of silver? This of course is theory, but taking the facts at the time, I extrapolated the data and found that the middle of 2003 was the time frame where the physical supply was tight. My thinking was simply, when we run out of silver the price must move upward.

    I want to emphasize this was just theory, and as the price of silver moves higher, more and more silver would enter into the marketplace. Each year I did the same analysis and each year, low and behold the summer of 2003 was the critical point. Now we are here, and silver has shown good price action starting on July 23rd, when it moved up 23 cents. This was one of the largest single day moves for silver in a very long time.

    Several factors came together this month that helped encourage the strong silver price action. First, Richard Russell of Dow Theory Letters turned favorable on silver. Richard has over ten thousand subscribers and some are professionals in the financial industry. Another fact that cannot be over looked is the excellent work done by Jim Puplava of www.financialsense.com, Jim did a very extensive article on the merits of silver investing and many thousands of internet people read the silver story for the first time. One of our speculations Coeur (CDE) was placed in the Russell 2000 and it did move the price of the stock briefly as those that have funds that represent this index went into the market to buy this stock.

    Silver prices hit a level not seen in over a year, during the fourth week of July. This was a big move and unexpected by most people. Silver has remained above 5 dollars since July 23rd, a very good sign. This move was almost entirely determined in the silver pit and really not tied to dollar price weakness or any other event. These factors do play a role, but our sources have informed us that one of the major commercial traders has started to view silver differently.

    Specifically, one of the commercial traders is buying silver in the price zone, that the commercials normally begin their selling pressure. There is no way to verify this rumor, however the fact that silver held above the five dollar breakout point, and had no real pullback in eight trading days does verify that there is strong buying at these levels.

    Some of this buying is of course short covering as well. Do not worry too much about missing the big move in silver, prices seldom move without corrections. Many have asked if I still expect a pullback into August. I do expect a pullback; look for the five dollar level to be tested briefly. If the price level moves substantially below five dollars it will indicate the shorts are still in control. If silver moves lower reluctantly, then it will indicate that my analysis of a strong silver market from this summer onward will be vindicated.

    The best way to establish an investment in silver, gold and the underlying mining equities we follow is simply to buy the dips. If we do not get a pullback in August, then you will need to establish a partial position.

    One of the best methods is dollar cost averaging. Simply divide your investment funds devoted to the mining equities into 4 equal amounts and invest that sum every three months. This is the general idea, certainly it can be done over a year or longer, or a shorter time frame. Also, if you plan to invest over several years, then simply add to your position on price weakness

    David Morgan "
 
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