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There’s no consensus on whether or not is in its second or third secular bull market for the reason that Nineteen Seventies. That’s as a result of individuals outline bull markets in several methods.
However as I’ll present you, it’s not that essential.
What we do know is that silver loved an enormous bull market from about 1971 till 1980, after which one other main bull run from about 2001 till 2011.
Most secular bull markets run via a interval, normally about half-ways on the time scale, the place the commodity’s worth falls by about 50%, typically extra. That is an remark by the legendary commodities investor Jim Rogers.
In my very own expertise that’s, in reality, typically the case, though typically the value correction is much less extreme if it’s drawn out over an extended time. Corrections are sometimes quick and deep, or lengthy and shallow. There is no such thing as a rule, and it’s by no means the identical.
Let’s dig into these earlier bull markets to offer us an concept of how silver has behaved. This can present considerably of a roadmap for what could lie forward. Spoiler alert: Wanting again on how silver carried out up to now factors to a lot larger positive aspects forward.
Previous Is Prologue: Silver Bull Markets
Within the Nineteen Seventies silver rose from a low close to $1.40 in 1971 to peak at $49 in 1980. That produced a whopping 36 occasions return, or 3,600%. Each $1,000 turned $36,000.
Then, silver ultimately bottomed in 2001 at $4.20, earlier than rising all the way in which again to $49 in 2011. Traders who had positioned themselves early loved a 1,160% return.
Now, let’s dissect each of those bull markets in additional element, as a result of understanding how they behave might help you higher put together. As you’ll see, silver is unstable. However if you wish to profit from its massive positive aspects, it’s a must to be prepared to carry on via what is usually a wild trip.
As I stated, silver bottomed close to $1.31 in October 1971. That’s when its Nineteen Seventies secular bull market started.
It then peaked at $5.78 in February 1974. That was a 340% acquire in lower than 3½ years. However then silver began to lose floor.
That correction took it from $5.78 to $3.97 in January 1976. It was a comparatively shallow, however drawn-out correction. By October 1978 silver had surpassed $5.78, and ultimately went onto a blow off mania excessive close to $49 in January 1980, gaining 1,130% from its 1976 low. (Notice: The $49 excessive in 1980 doesn’t seem on this chart as a result of it exhibits month-to-month costs.)
Silver’s acquire from the 1971 low of $1.31 to its $49, 1980 excessive was an astounding 3,640%.
20 years later, it might do one thing comparable – once more.
In November 2001, silver bottomed at $4.14. Nobody was paying consideration, and nobody needed it. Silver was the right contrarian commerce. It then launched into a brand new bull market, rising to $19.89 by February 2008, producing a 380% acquire.
Silver then corrected from $19.89 to $9.73 in October 2008, putting in a relatively short but sharp 50% correction. It then went on to climb all the way to $49, reaching that level in April 2011, for a 403% gain from its 2008 low.
But during its decade-long run that started in 2001 up to its peak in 2011, silver gained 1,080%. That’s a tenfold gain.
Prepare For Silver Corrections
Silver is volatile. There’s no denying it. But that’s also part of its appeal.
Between 2002 and 2006, silver dropped 10% or more four separate times.
Then, between 2006 and 2011, more short but sometimes deep corrections came, with silver dropping 13% or more three times.
Overall, from 2001 until its peak in 2011, silver gave back 20% or more four times. But the real takeaway is that anyone who held on from the beginning enjoyed an astounding 1,080% gain.
And one final point to consider; silver stocks offer tremendous leverage to silver itself.
This chart compares the performance of iShares Silver Trust (NYSE:), a silver ETF that mimics the price of silver, with SIL, a silver ETF made up of mostly large silver miners. The chart runs from mid-January to early August 2016.
The black line is SLV and the blue line is SIL. During this six-month period, SIL was up 240%, dramatically outperforming SLV which gained a very respectable 48%. Silver stocks were up by five times as much as silver itself in just six months.
That’s why I want to own silver stocks, as well as silver itself. The leverage can be tremendous.
Where Silver Stands Today
Given the extreme and unprecedented levels of stimulus, money-printing and debt in the last few decades, my view is that we are still in the midst of the silver bull market which started in 2001.
I think silver’s bull could run for a total of about 25 years starting from 2001. With that in mind, we could have another 5-6 years in front of us, maybe more.
From silver’s $49 peak in 2011 to its $12 bottom this past March, silver lost 75%.
The fact that silver bottomed at $12, which was almost triple the $4.14 low in 2001, suggests to me that we are still in the same powerful multi-decade bull market.
My target price over the next few years is for silver to reach at least $300. How I reach that number is a topic for a future article. But before you think I’m crazy, I can assure you that it’s an estimate relating to the gold price, and based on how gold and silver have performed in previous bull markets.
If silver reaches my target of $300, that will be a 1,150% return from its current price near $25.
While that’s a tremendous return, you need to expect volatility and future corrections. But you’ll only benefit if you’re willing to stay the course. There will be opportunities to lock in profits along the way, especially in silver stocks, but you need to have a core position you’re willing to hold through corrections for maximum gains.
I’ve written a detailed Silver Report explaining why silver has large upside, and is heading a lot greater within the years forward. In it I cowl each the demand and provide facet dynamics for silver, exhibiting why the metallic is essentially nonetheless very low cost, however how the outsized alternative is in explosive silver shares.
Bull markets do their greatest to carry alongside the fewest individuals. Simply don’t let the silver bull shake you off.
Disclosure: I personal shares in SIL.
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