Transcription
The silver market has not seen this since 2004. What am I talking about? Well, I'm talking about an intermediate term correction within a secular bull market. Okay?
And if we go back to 2001 to 2011, the last intermediate term correction we had was actually 2006 or 2004. But 2004 might be the best comparison for where silver is now. And in this video, I'm going to show you the evidence of that and wrap up the week in gold and silver. So, let's get to it.
Okay, so I sent this out a couple days ago to premium subscribers as part of a flash update. And looking at the history, we do know that 1974 is one potential comparison for silver, although that was a cyclical peak for silver. Gold's cyclical peak actually was after that. And so, I don't believe that is the best comparison for silver. Instead, I've settled on 2004. And let me tell you why.
Here are the daily charts. We can see of the early 2000s and here is recently. And I've highlighted important price action when silver both times essentially went parabolic. Now, what are the comparisons between today and 2004? Well, this period right here was early in a new secular bull market for silver. And remember from past videos, I've told you we began a new secular bull market in gold and silver based on everything I've looked at in 2023. No, it wasn't 2015 or 2018 or 2001 as some people are claiming, but I digress.
So, this was early in a new secular bull market. Now, remember, it began in 2001. And so, silver bottomed in 2001. It moved up. It it was steady for a little while. had this bullish consolidation going. It really started to move in 2003 and then at the end of 2003 into 2004 and made this parabolic move. So, this was a huge move that was early in a secular bull market and then silver essentially crashed back down from $8.50 an ounce all the way down here. So, this was a 35% maybe 37% correction or so down here. Okay, but this was actually the bottom. This was the price low right here. And so when you're in a secular bull market and you're not at a major top, you're an intermediate term peak or a medium-term peak. When you get these sharp moves down, that tends to be the low in price. So, this was the low price for silver in this period.
Now, it took a couple months to get going and then it grinded higher and then it eventually consolidated for a year or so before it broke out again. But that aligns well with where we are here and now because we see a similar acceleration move here and then you have a bull flag in the middle. So this was a bull flag and what happened? It came all the way back down like this. It basically settled just below the bull flag right here. So it settled for a couple months when it was trying to bottom. We see the same thing here. This is the bull flag. And then we can see silver had this low. It tested that again. went lower again here and it's trying to settle here around the low of the bull flag. So if you look right here, the previous resistance was 525 and silver essentially bottomed at about 550. And so the low here was 55 and this is likely to be the bottom I think here at 60. So it came all the way back, didn't quite retest that form of resistance perfectly. Same thing here in this case.
And we can also look at the gold silver ratio of the comparison. So we can see here this is gold divided by silver in the early 2000s. This is gold divided by silver in the last couple years. And we can see they're similar. I mean you had the sharp move and you had the sharp collapse when silver went parabolic in both cases. And now you've had the sharp rebound in the gold silver ratio and this consolidation here. So I'm not saying this is a perfect comparison for silver today, but it is one to keep an eye on. There's enough similarities here that we can have confidence that silver has bottomed and it will grind back up and work its way higher.
Okay, now getting to another chart here. Now, moving on here. The purpose of this chart, gold against the S&P 500, is just to reiterate that we're in an intermediate term correction in the precious metal sector. So, this is a great indicator really for everything in precious metals. It's a great indicator for silver, the miners, etc., and also gold, of course.
So, C marks the cyclical peaks. Now, secular peaks, those are the major peaks that tend to hold up for decades. So, this was a secular peak here, secular peak here, secular peak here, secular peak here. So, I didn't want to label all those because we're more focused on cyclical and intermediate. So, cyclical peaks are the most significant peaks within a secular bull market. So cyclical peak here, cyclical peak here. That was 2008. This was 74, the very end of 74. And I've noted them here on the nominal gold chart as well.
Now the eyes, those point to intermediate term peaks. So you can see intermediate. So you can see the peak here, peak here, peak here. Same thing here. Here, here, here. Another intermediate term peak here. There there. And then here. There's one right there. one right there. And so here and now we're at an intermediate term peak. Same thing with respect to the gold the gold the stock market ratio here. And this was a bit of an intermediate term peak there. But I digress.
And so the larger point here is look at how high this ratio went before you had a cyclical peak in this inflationary period which is much more like today than this period right here. But still you can see this was a big move for the cycl for this was a big move up until the cyclical peak and this is where we are here and now. So we have not moved anywhere close to enough where we're at a cyclical peak. So we're at an intermediate term correction in the precious metal sector. And who knows it could be ending fairly soon.
And so here we are looking at our gold correction analog chart. And so we're looking at and so gold in its history has had three major breakouts. Not four, it's only had three. And so we looked at the most significant correction in gold after the other two major breakouts and we placed them on the scale of the current correction which is in black. And so those other two corrections were in 1973 and 2006. And so the arrows and circle shows where we are here and now. Okay. Right about 4700.
Now I know that people are getting excited because we've seen the miners perk up a little bit. Silver's perking up. It's outperforming gold. Okay, that's all great, but it's too early to say that gold is just going to start taking off like this. Okay, because if you look at the recent price action, this is not particularly bullish yet. We really need to break through here, probably 4,800. You can see this peak here. We need to break through that on a weekly basis to think that the correction in terms of time is over. And so maybe gold doesn't have to come all the way back down to this level here. Maybe it just goes sideways for a couple more months before turning up. Okay, before turning up uh like gold did at those other points.
Just a reminder, this looks bearish. However, what happened after these two moves? This is what you got. Okay, more than double in 14 months and then 85% in 70 months. So look at you could pick 4,000 gold and take 85%. I mean that's putting you over 7,000 gold late 2027. That's pretty damn good.
Now here's the daily look at gold and silver. And a couple things to note here. Silver has rallied back near 81. And this is spot silver, by the way. 81 is significant resistance. So silver has already rallied back to this resistance right here. So gold hasn't done that yet. So silver is outperforming gold now. And here is gold divided by silver. And I'm not ready to say that this is about to dump lower like that, which would favor silver. But the fact that silver has been able to rally back to this peak here, that's encouraging in the short term. But again, this is stiff resistance. So, we might get some more selling. I do think that the bottom is in for silver. This low right here, $60. I don't see silver going all the way back down. I mean, it might test 70 right here. I should have put another line there, but you can see here, $70 right there. That's support right now. So, I could see it going back and testing 70. Otherwise, it may just consolidate and be rangebound for a couple more months. And same thing with gold.
Now, moving on. I got a new chart here, and this is a silver correction analog. So, this black here, this is the current silver correction. And on that scale, I've put in the 1974 correction, the 1980 correction. Well, that was a crash corrections in 2004, 2006, also 2011, 2008. And so, this is 1980 right here. So, we can obviously delete that, remove that. This one right here, I believe, is 2008. So, 2008 held up for a couple months and then it collapsed. And so, this is 2004 right here. These two are 2004 and 2006.
Now I'm going to go to the next chart because I've removed those ones which I don't think are pertinent right now. So we're looking at 1974 and that's here in yellow. And then we have the 04 and04 index. So these were the two intermediate term corrections in a secular bull market for silver at least most recently. 2004 I think is the best comparison. But you can see 04 and 06, they're fairly similar based on how they corrected here and their trajectory. They corrected, they had an oversold bounce, they came back down, and then they trended higher and eventually broke out to the upside. For the 2004 correction, that happened in ' 05. And then for 06, I believe that happened in late 2007.
And so let's look at the time scale here. And so now we are in May right now. And if we go over here, this brings us to July, August. Here's June right here. So if silver is able to reclaim 80 and push above and get into this area in June, July or August, we could say this summer, then that performance will tell us, okay, this is more in line with 04 and 06 than 1974. Because after the huge move in silver in 1973, what happened was it basically formed a big and super bullish bull flag, but it went sideways for years and years before that move at the end of the decade. I don't see that happening silver. So, I think the odds probably favor it trending more like this than this right here.
Now, last thing I want to talk about with silver is, and I mentioned this several weeks ago, the open interest in silver, which you can see here. It's this line. What is this? Brown or green? I'm color blind, so I can't tell. So, down here, open interest in silver is plunging. This is the lowest since the end of 2011. So, that is like a 15-year low. Okay, the open interest. So, I don't think we're about to see silver plunge to $60 or $50 given the extremely low open interest in the market. So, this what this tells us along with the price action is it's not only oversold, but it's sold out. There's no sellers left.
And let me just go back and look at the daily chart. And so, silver peaked around 120. You had this heavy selling. You had this heavy selling. And now you had this selling here. That's a significant amount of selling for a market that just broke out of a 45 year long base and is at a new all-time high essentially. I mean, the fact that it's above $50, it's holding above 50 here. So there there may be no sellers left. Okay, there was no sellers left when you broke above 50 and you got this move. But after this sharp move here and this one here, it may be all sold out.
Okay, now getting back to where I was. That doesn't mean that silver is about to go like that because I don't see that happening. But it means the bottom low is in and it may start to steadily grind sideways and then work its way higher. And if you consider that commodities are performing well, the economy, at least temporarily, is doing okay, these are the times when silver is going to outperform gold. So that in the fact that we've probably seen a significant low at $60 is why I may need to do a silver specific update or update my top 10 list of silver companies for premium subscribers.
And for those of you who are premium subscribers and have signed up, thank you. I appreciate your business. And for those of you who are not premium subscribers and you do own individual companies, you can count on our expertise and guidance in the Daily Gold Premium. And in the Daily Gold Premium, I'm covering the companies that I'm personally investing in. And what I look for is a combination of quality, but also upside potential. What does that mean? It means I'm looking at companies that have quality projects, quality management. If they're development projects, they're going to become mines. If they're producers, they have good projects. They have growth potential and they're building more mines. And then I look at upside potential. Are these companies that have at least 3x to 5x upside potential over the next 2 to 3 years? And I look at current prices and margins to assess the potential. I'm not counting on $100 silver or $8,000 gold to do these calculations because if you find a company that in the next couple years has 3x or 4x upside potential at current margins and current prices if the bull market continues that can go up 5x 6x or 7x. So that's what I'm personally investing in and that's what I cover in the daily gold premium. Would love to have you come aboard. Head on over to the daily.com/premium. And with that, I thank you and we'll wrap things up with a couple more charts.
Okay, so I believe this is the most important chart in macro right now with respect to gold and precious metals. So this is gold against the NASDAQ 100. And here we can see this is in a beautiful 9-year long base. Okay, you got to go back to 2017. But we can see here how the ratio stopped during the COVID crash. It also stopped recently, but it's come back down. It's bouncing a little bit at the equivalent to the 400 day moving average. And we can see this moving average how it's been an excellent indicator of the trend. And so ultimately, when this thing turns up, that means more capital is going to move away from tech stocks in the MAG 7 and back into gold and precious metals. And so eventually when we see this baby make a big move and break out like that, that is going to be the fuel that pushes gold to 7,000 8,000 maybe even 9,000 two or three years from now. And that is when you're going to that is when you're going to be at the end of the cyclical bull market and diving deeper within gold against the NASDAQ 100.
This is gold against the MAG7. Okay. Now, gold against the MAG 7 right now is trading in a three-year long base. It's come all the way down to the 400 day moving average, starting to bounce a little bit. And so, it's the same scenario as this chart right here. When this baby rallies back to resistance and breaks through, that is what is going to fuel that next huge leg higher in precious metals in the miners and gold and silver as well because huge amounts of capital are hurting in the MAG7 and also tech stocks. And when that capital has to shift and go into gold and precious metals, it's good night for the stock market and it's going to be a really good time for precious metals. So, we'll keep you a breast of these charts, of course, in future videos.
Okay, let's wrap things up here and talk about the miners and the daily candle charts. And the candles are not especially strong. We did have this big gap up this week. Hard selling Thursday, but a good recovery today. And so, looking at GDX, maybe it pushes up here to this area right here, but there is resistance here around 100. So, If it pushes up next week, I'd expect selling. It'll probably come back down like that. Same thing here with GDXJ and the silver stocks. 130 is resistance here for GDXJ. So, a close of 125. So, maybe it pushes up to this resistance here. Then you get more selling. SIJ and the silver stocks, they're a little bit stronger. It's already tested this level right here. So, we'll see if silver stocks are able to punch through this next week or if they start to roll back like that. Gold stocks will probably follow that.
Well, that's all for the video. Thank you so much for tuning in. Hope you guys had a good week. Hope you have an even better weekend. And next week, we will be back with Vince Lansancy. Expect that interview to be published Wednesday, early.