After seven years of investing in precious metals you become something of an old-hand, not that this would impress the true veterans who recall the late 1970s. They are getting a bit old themselves now.
A sprightly 87-year old President Carter was on the BBC last night for a long interview, and sounded very impressive unless you are old enough to remember his abysmal presidency.
The man himself comes across as a bit of a 60s dreamer with flowers in his hair and peace and love stamped on his face. He is very genuine and has not made a cent out of being an ex-president. But he was a disaster, hopelessly out of his depth in Washington during a period when the world needed leadership.
Hunt Brothers
Goodness knows how much his goodly nature cost the world! He was also US president in the last silver boom. Inflation got completely out of control. The Hunt Brothers cornered the silver market and sent prices sky high. Only President Reagan and Fed chairman Paul Volcker saved the world from a hyper-inflation with their monetarist clampdown.
So where are we today for the tiny global silver market? We still seem to be in the early days of an inflation, and could even have another deflation of asset prices on our hands if the eurozone messes up its bailout package or a rapid inflation if they double-up on money printing as most seem to expect.
It is never that easy to judge is it? And markets are so confused they are not giving us much guidance. Technical analysis is only right until it it wrong as fundamentals tend to repeat but never exactly.
But the silver charts are predicting another backtracking in prices, according to the singularly precient CliveMaund.com. At a fundamental level that could come from another nasty twist in the eurozone saga sending markets into a dive and a flight to the US dollar and out of silver and gold: 2008 revisited!
However, trying to market time anything these days is very difficult. The good news about silver is that when this sell-down is complete the next target is very obviously the April high of $50, also the 1980 high for the metal.
1980 all-time high
One of the most remarkable things about silver and the biggest and undeniable truth about its undervaluation is that 1980 price. What else in the entire world costs as much as it did when Jimmy Carter was in Washington making America a laughing stock?
If you wanted a surefire bet the idea that any commodity could stay below its 1980 all-time high forever just has to be a nonsense. Reason then to hold your silver just in case the market turns up without this expected sell-off, and it did just that a year ago. Perhaps the eurozone officials have it sussed after all. Then again even dear old Jimmy Carter could manage to up inflation.
So if the chance to buy some silver on the cheap around $25-28 an ounce comes do seize the opportunity as CliveMaund.com suggests. But be weary of trying to trade volatility in such a capricious performer as silver where physical sales and spot-prices already point to an imminent price break out (click here).
To capture all the upside in the coming price boom you are more than likely going to do much better by staying fully invested or you might miss one or two of the best phases.
Where should silver prices be and how high will they go? Who knows, silver might be worth more than gold (click here) but prices will be very, very much higher. But taking a series of leveraged punts on silver is far more likely to leave you penniless than rich as your timing will be wrong more than it is right.
