Tuesday, December 3, 2013

ON-SALE in 2014: Silver to $16.76, $15.15, then $13.71

Are such low silver prices ever possible again?  Technically, yes. 
Unless one was fortunate to have acquired the bulk of their physical silver allocation circa 2005 at an FRN price of under $6.00 per ounce (as many of our subscribers have), silvers fall from grace since its 2011 peak has been nothing short of a hellish nightmare for most. 
Lesson; never go ALL-IN anything unless you can afford and are willing to lose your entire wager.  Place your bets accordingly.
The current bear market in precious metals has had no mercy for those too anxious in backing up their trucks to load up on these highly valued and much sought after monetary components.
NEWSFLASH:  Gold & Silver (REAL-MONEY) remains ON-SALE!

The classic monetary metals shall always remain in high demand because throughout all of recorded history, they have NEVER FAILED in effectively balancing and insuring the most successful and well-rounded financial portfolios.  Current price levels and the dominant downtrends in Gold and Silver are poised to lend prudent metals investors several more opportunities to dollar-cost average into another major bear market low in 2014. 
The long-term chart above illustrates silver enmeshed in a ravaging bear market that is approaching 3-years in duration; note the downside swing target listed at $13.71 FRN’s per ounce.  From an Elliott Wave perspective, the (ultimately mega-bullish) primary move down to the red wave-2 is unfolding clearly in three corrective waves (a), (b), and (c) at the intermediate degree of trend.  Of which, the current intermediate wave (c) decline appears poised to unfold in five waves down at the minor degree of trend labeled numerically in blue.
Zooming in closer from the long-term weekly price action above to the daily chart below, illustrates Septembers minor wave 4 crest at the $25.12 level followed by an impulsive minute decline to wave-1 at $21.21.  Thereafter, a sideways upward correction to minute wave-2 (alt: light blue minor-4), and a current minuette degree five-wave decline toward the red colored minute 3-wave at the lower right portion of the chart is illustrated.  
(This 3-wave terminal alternatively labeled with the smaller degree light blue 5th wave terminals upon which, a print beneath $18.18 could alternatively end the entire primary bear market).  If the pending red colored minute waves-3 and 4 remain in play, then the bears must hold any 4th wave rally beneath the $21.21 level, which would violate the wave-1 terminal, which in turn would suggest that a major primary 2nd wave bottom may have already passed.
Most recently, after hitting the first downside swing target drawn at $19.18 on Monday (BAM!), $16.76 illustrates the next downside swing target.  Also notable on the daily chart is the stiff horizontal resistance at $26.07, which defends a downside price target of $15.00 FRN’s per ounce.  The rising red trendline so arrowed defends a similar downside price target at $15.15 FRN’s per ounce.  
To sum up, although the precious metals markets can print a final bottom at any moment, if a major bottom were to occur in 2014, and the downside price targets mentioned above occur as forecasted, how might one begin to amass a prudent speculative position in silver over the coming year?  
The first thing one must ask is how much physical Gold and Silver should one own relative to their net worth.  (An annually rebalanced 10% allocation is the most common and conservative wisdom.)  Secondly, if one has the sufficient number of FRN’s (Federal Reserve Notes) on hand, might we suggest deploying only HALF the allocation, and deploy those FRN’s in four-stages.  Doing so will keep the other half of the allocation ready for future deployment in the event silver FRN prices go even lower than $13.71 per ounce. 
For example: One could divide half their allocation within four purchase points starting with 25% now at $19, then accumulate 25% more at $16.76, then again at $15.15, and the last 25% at $13.71 for an average cost basis of around $16.00.  If all goes according to plan, one would then be HALF-IN, and fully prepared to make four more similar purchases in the event silver goes all the way back to $6.00 FRN’s per ounce, which is plausible, but highly unlikely.
Buy Low, Sell High…  That’s what they say…
Perhaps another option to begin funding one’s precious metals holdings is to take profits and sell some of that which is overvalued (stocks) in order to acquire that which is undervalued (monetary metals).
Where to Buy Professional Market Timing Guidance: 
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It is time to invest in that which best assures safe and profitable passage.
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Ten more things you can do right now to buffer inevitable shocks of all shapes and sizes: 
  • Get out of debt (100% debt free is the ultimate goal)
  • Covet and protect your currency flows
  • Maintain physical local currency on hand (6-12 months of living expenses)
  • Maintain physical possession of Gold and Silver  (re-balance annually at 15% of net worth)
  • Hedge all bets using separate brokerage accounts that enable true strategic diversification
  • Use timeframe specific strategies to manage like accounts
  • Maintain prudent unbiased disciplines in executing and managing your strategic plans