Gold $2,100 and Silver $30. What Next? / Commodities / Gold & Silver 2020

On August 7, gold in U.S. dollars, notched its all-time nominal highof $2,089 (It's been printing new highs in many other currencies for quiteawhile now.)

Silver peaked (so far) at $29.92.After a few days of attempting to scale $30, it gave up the ghost and dropped astunning $4.90 intraday, closing down $3.20.

Not satisfied with punishing the bulls during the daysession, silver proceeded to drop another $2.30 in overnight Forex trading, butnext day opened virtually unchanged just below $26!

Thus far, it's certainly lived up to its reputationpopularized by David Morgan who has famouslysaid that "Silver will either wear you out or scare you out!"

Those who were late to the game (within the last fewweeks), found their positions either underwater or at best, break-even.

Even more so, pity the leveraged metals' ETFspeculators who bet with options or futures.

When the margin clerk contacts you, it's time toinstantly pay up or be closed out by your broker - no excuses!

This is where those who principally hold physical gold,silver, and platinum in hand (preferably not in a bank box), or in a securestorage facility like Money Metals offers, and who take the longer view, get tosleep easily at night.

Some investors have made several large buys over a fewyears; many have dollar cost averaged by the month or quarter; and still othershad the courage to buy into declines when weak hands were selling out or afraidto buy.

My guess would be that most who read this column are inone of these accumulator sub-categories.

They decided how much they wanted to acquire, earmarkedthe funds, and activated their plan without paying a lot of attention to whatthe herd might be doing. They are investing professionally.

And if we're right about the size and duration of thecurrent bull run, which saw record high gold prices and a virtual doubling ofsilver in just the last few months, these fortunate "stackers" aregoing to be quite happy in the coming months and years with the result of theirefforts.

Don'tbe too concerned about large nominal price swings.

In fact, I can tell you with a fair degree ofcertainty, that "You ain't seen nothin' yet," whether in terms of thecoming intraday/overnight price (volatility), or in regard to the ultimate highthese increasingly precious – and scarce – metals are ultimately going toreach. You've no doubt heard analysts speak of "three-digit silver"and $8,000-$15,000 gold.

For my money, this kind of talk may not be all thatfar-fetched.

It would not take a societal collapse, civil war, orregional conflict among nations to bring it about either.

The massive debt incurred by our Federal, State andlocal level "leaders," not to mention most other countries'governments around the world, added to declining new metals' discoveries,shrinking ore grades and lengthy mine development lead times post-discovery,have the potential to bring these lofty prices into view all by themselves.

But the biggest reason you should want to have a solidposition in physical metal, is that it serves as an "insuranceoffset" against a value decline in other assets you hold, and against thedevaluation – stated as public policy by our government – which guarantees tomake every dollar in your pocket worth 4-10% less each year, as far as the eyecan see. You're holding real "money" simply by receiving it inexchange for some of your "paper promises."

Where could metals turn aroundtoward new highs? If the price declines lately are just "corrective" in nature, wheremight their drop find chart support?

Two charts below, utilizing highly predictive FibonacciRetracement percentages, courtesy, Peter Degraff, can offer us some clues.

Prices could certainly plumb even lower withoutdisrupting the bullish case, but these figures do offer a magnetic frame ofreference, to which millions of traders around the world pay attention daily.

When might the next leg up get underway?

Technical Analyst, Gary Savage, who has a good recordof ironing out such things, has stated in the public space that an intermediate(weeks to months) term correction is underway. He feels that the final washout(as low as $1,700?) "could be another six to eight weeks out."

But then there's this: During the evening ofAugust 12, both gold (-$76) and silver (-$2.30 ) declined sharply, stopped nearinitial downside targets, then turned around in just one session.

What this could mean is that, just like how Mr. Marketfooled most people who thought that silver would struggle for the rest of theyear to get through multiple resistance areas between $20 and $26, let alonealmost touch $30. Then look what happened in less than a month?

And even more amazing, how about gold? Cutting throughits all-time US$ high at $1,923 and notching several closes above $2,000 soonthereafter!

What this tells me is that trying to predict when orwhere a given price point is going to be reached with these "restlessmetals" is about as risky as not buying any in the first place.

Yes, normally, we could expect a two month"consolidation/washout" of weak hands, before new tries to take out$30. But were the last six weeks normal? In a vibrant bull run like this,virtually anything is possible, and it behooves both you and me to keep thatsort of thing foremost in mind.

For sure, if you're one of those people who either havenot purchased as much as you want – higher premiums notwithstanding – or stillhave not even begun to accumulate, then, pray tell, why not?

The late Jesse Livermore, one of the most famousspeculators who ever lived, once said, "It was never my thinking that mademe the big money, it was being right and sitting tight, got that!"

Yes, maybe you'll have another six weeks to get yourmetals' shopping done before we see gold above $2,000 again and silver above$30. But then again, maybe not...

Either way, the big swings we're seeing may be offeringone of the last and best opportunities you're going to presented with for quitesome time to come.

David Smith isSenior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com aswell as the LODE Cryptographic Silver Monetary System Project. He hasinvestigated precious metals’ mines and exploration sites in Argentina, Chile,Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sectorobservations withr eaders, the media and North American investment conferenceattendees.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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