Silver Is Ensured A Prosperous 2020 Thanks To The Fed / Commodities / Gold & Silver 2020

In my previousarticle, I’ve written about how important US dollar movements arefor future Silver prices. The chances of a significant Silver rally during US dollarstrength is very low; and it is very high during US dollar decline.

The structure of the Silver bull marketsince 2001 has a lot in common with that of the 70s bull market. However, oneof the important differences pertains to US dollar movements.

Below, is a comparison of a long-term Silverchart and the US Dollar index:

The first part of the current Silver bullmarket (1 to 2) has outperformed the bull market of the 70s (1 to 2). Much ofthis outperfomance was due to a deeper US dollar decline during the 1st partof the current bull market (2001 to 2011) as compared to the 70s bull market.

In a similar manner, the retracement frompoint 2 to point 3, in the current pattern, has been much deeper than that ofthe 70s pattern. Again, this had a lot to do with US dollar movement during therelevant period.

The US Dollar index actually movedsignificantly higher (red line on current US dollar pattern) during theretracement of the current pattern, whereas it was virtually moving sidewaysduring the retracement of the 70s pattern (small red line on 70s US dollarpattern).

The current range of movement of the USdollar is therefore, much bigger than the 70s. This shows that the monetarysystem and the US dollar is much more unstable or volatile. The risks andspeculation is getting bigger , which leads to bigger declines at the end ofthe credit cycle, which in turn needs an even bigger stimulus/bailout to keepthe system going (which translates into a weaker US dollar eventually).

The credit extension and speculation fromthe early 2000s to 2007/2008 was big, and it led to a massive bailout andstimulus being required during the 2008 financial crisis. Silver prices reactednicely to this by going from around $9 to almost $50.

The big stimulus (which was reflected in thesignificant increase of the monetary base or Fed balance sheet) was the setupfor the continued credit extension and speculation, which brought us to 2020,where an even bigger stimulus is required (it looks like it is only gettingstarted).

Since the current stimulus (increase in Fedbalance sheet) is likely to fail, due to the massive deflationary forces , theyare likely to just keep on pumping more and more.

Based on just the current stimulus sincelate 2019, Silver is already ensured a very prosperous 2020, and willeventually outperform the 70s bull market as well as the 1st part ofthe current bull market. Don’t expect a similar effect on other assets like thegeneral stock market.

Everything about the current Silver bullmarket is likely to be bigger and better than the 70s, as can be seen in thischart:

For more on this, andsimilar analysis you are welcome to subscribe to my premium service. Ihave also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

Warm regards,

Hubert

“And it shall come to pass, that whosoevershall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

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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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