Silver prices | What Crude Oil Says About Silver Price :: The Market Oracle ...

Silver prices | What Crude Oil Says About <b>Silver Price</b> :: The Market Oracle <b>...</b>

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What Crude Oil Says About <b>Silver Price</b> :: The Market Oracle <b>...</b> Posted: 26 Jun 2014 12:37 PM PDT Commodities / Gold and Silver 2014 Jun 26, 2014 - 06:37 PM GMT By: DeviantInvestor If you want to know where silver prices are going, ask crude oil! Crude Oil Prices: December 1998            Crude Oil price was under $11 January 2000:               Crude Oil price was about $24 July 2008:                      Crude Oil price topped about $147 December 2008:           Crude Oil prices crashed to about $35 June 20, 2014:               Current price is about $106. Summary:  Prices are volatile, spiked high and low in 2008, and have, on average, risen steadily for the past 14 years. Politics:  The situation in Iraq, a major oil producer, seems to deteriorate every day.  The chaos and violence could easily spread and that chaos and violence will reduce supply and kick crude oil prices higher.  Adding to the chaos, central banks will "print" more euros, yen, and dollars and governments will add to their mountains of debt.  Price inflation will accelerate and the dollar will weaken further. Demand:  More cars in Asia need gasoline.  Even if the world economies contract, demand for crude oil should continue to rise. Conclusion:  Crude oil prices have many reasons to explode higher and few to drop lower.  The trend has been up for more than a decade.  Central banks will print, politicians will instigate more wars and invasions, and each euro, yen, and dollar will purchase even less crude oil and gasoline.  It is business as usual, but with an extra dollop of chaos, war, and price inflation tossed into the mix…. Dennis Gartman: "It's abundantly clear that Iraq as we know it will cease to exist in the not very distant future – probably within the next year and a half." Arabian Money:  "Only this time may be different.  The geopolitical crises unfolding in Iraq and also the Ukraine do not look like passing convulsions." Conclusion:  Higher oil prices, more military spending, more debt, more chaos, higher consumer prices.  How does this relate to silver? The following graph shows the price of crude oil in black – left axis, and the price of silver in red – right axis, for the past 12+ years.  Both lines have been smoothed with a 52 week simple moving average of weekly crude and silver prices. 1)   Crude and silver have been trending upward for 12+ years. 2)   The dotted lines are approximations of their linear trends – clearly upward. 3)   The 52 week moving average of crude is about $100 – below the linear trend.  Market price is a bit higher with plenty of room to spike much higher as Middle-East and Ukrainian warfare escalates. 4)   The 52 week moving average of silver and the current market price are both about $20 – well below the linear trend.  Silver could more than double in price and not violate the 12+ year upward trend. 5)   Crude oil prices are moving higher and silver prices will follow. 6)   Statistical correlation between crude and silver for 12+ years of weekly smoothed prices is about 0.84 while correlation between unsmoothed weekly prices is about 0.79.  Crude and silver prices are closely aligned in the long term. Regarding gold and silver:  1)   Statistical correlation between 52 week smoothed gold and silver prices is over 0.97.  If gold is going higher, so is silver. 2)   Richard Russell: "The Bear Market in Gold is Over." 3)   Jim Sinclair:  "30 reasons, 23 new and 7 set in cement, of why the Bear phase in the bull market for gold ends this summer without any new lows." CONCLUSIONS:  1)   Crude oil prices have been going up for 12+ years and will continue to climb.  Politics and war will accelerate the price increases. 2)   Silver and gold prices have bottomed and are resuming their bull markets.  Expect much higher prices. 3)   Rig for stormy weather – coming in from Iraq, Syria, Ukraine, Russia, South China Sea, "amateur hour" in foreign policy, more wars and invasions, and much of Asia reducing their dependence upon the dollar and Treasury bonds. 4)   Preparation is essential. 5)   Silver purchases are good preparation. GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail © 2014 Copyright Deviant Investor - All Rights Reserved 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. © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. Only logged in users are allowed to post comments. Register/ Log in

Gold and <b>Silver Price</b> Building a Base :: The Market Oracle <b>...</b> Posted: 27 Jun 2014 04:39 AM PDT Commodities / Gold and Silver 2014 Jun 27, 2014 - 11:39 AM GMT By: Alasdair_Macleod It is three weeks since the managed money category on Comex placed their biggest bet ever recorded in recent times that silver was going lower, and also bet big-time that gold would sink below $1200. As is often the case when traders are so commonly committed to a price outcome they end up nursing some painful losses. To add to the bears' misery the technical analysis position is now turning positive for both metals. Silver for example has broken its three-year downtrend on good turnover, as shown in the chart below. There is some work to be done on this chart before challenging major overhead supply at the $26 level, but it gives good initial scope on the bull tack. The gold chart may also be finally breaking out on the upside, with the 200-day moving average at $1288 and beginning to trend upwards. For many traders the sequence of a price higher than its long-term moving average, when it is also rising, is the basic definition of a bull trend. The first major hurdle is $1420, and if the gold price can get through that, traders will be looking to take out potential supply at $1520+. This is shown in our second chart. The shorts on Comex are unwinding quite rapidly, as one would expect. But turning bullish is never a simple matter for hedge funds and algorithmic traders, who often need to become bearish on something else, and here we need to look at fundamentals, particularly the economic outlook. The most notable news on Wednesday was the sharp downward revision to US 1Q GDP, from an original annualised rise of 0.1% to a huge fall of 2.9%. The sting was made worse by the deflator, which at only 1.3% clearly underestimates true price inflation. Even the Government's fictitious deflator will probably register about 1.8% in Q2, close to the Fed's 2% target. As usual Wall Street analysts continue to be optimistic for Q2, but the signs from recent business and consumer surveys have tended to disappoint. Furthermore, initial official figures for Services Spending for April and May, representing 68% of GDP, show very little growth for the first two months of the current quarter. On top of this bad news growth of the US$ Fiat Money Quantity slowed to a virtual halt in April, suggesting that underlying credit conditions are rapidly tightening. Tightening monetary conditions are bad news for an economy that appears to be slowing both sharply and unexpectedly, while prices are rising. They had a word for it: stagflation. These were the conditions that prevailed in the 1970s bull market for gold. A combination of a slowing economy, tightening credit conditions and increasing price inflation also represents growing stress for the financial system. This appears to be taking the Fed by surprise according to recent FOMC minutes, so further intervention may be required.  This could be a reason for traders to turn negative on equities and bullish for gold and silver in the coming months. Next week's announcements Monday. Japan: Housing starts, Construction Orders. Eurozone: M3 Money Supply, Flash HICP. UK: M4 Money Supply, Mortgage Approvals, Net Consumer Credit. US: Chicago PMI, Pending Home Sales. Tuesday. Japan: Tankan Survey, Vehicle Sales. UK: Halifax House Price Index. Eurozone: Manufacturing PMI. US: Manufacturing PMI, Construction Spending, ISM Manufacturing. Wednesday. Eurozone: PPI. US: ADP Employment Survey, Factory Orders. Thursday. Eurozone: Composite PMI, Services PMI, Retail Trade, ECB Deposit Rate. UK: CIPS/Markit Services PMI. US: Initial Claims, Non-Farm Payrolls, Trade Balance, Unemployment, ISM Non-Manufacturing Index. Friday.  US: Public Holiday. Alasdair Macleod Head of research, GoldMoney Alasdair.Macleod@GoldMoney.com Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is also a contributor to GoldMoney - The best way to buy gold online. © 2014 Copyright Alasdair Macleod - All Rights Reserved 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. © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. Only logged in users are allowed to post comments. Register/ Log in

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