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Chart 1: Silver's Longest Bear Markets
Silver has now had 4 very long bear markets. We are measuring the bear markets in terms of time which means the endpoint is not necessarily the lowest price.
At present we see downside risk in Silver. Maybe it will test the December lows or maybe go lower. Maybe not. Even if Silver retraces most of the 2016 gain, fear not. First, note that the 1980-1986 bear ended about 5 months from now. Second, following the other three lows, Silver gained 65%, 88% and 94% in roughly 12 months. Say Silver's next low is at $14 (near the 2016 low) towards the end of this year. If it does the average of the three other rebounds it would reach ~$26 in Q4
2018.
Chart 2: TDG Junior Mining Index w/ Oversold Indicators
Measuring a market's distance from various moving averages and rate of change over various periods can be useful as oversold/overbought indicators. Here we check how our junior index looks as far as 50 days and 200 days.
The indicators show the index has more room to go before it reaches what we'd deem very or extremely oversold. The index is ~20% from a retest of the December 2016 low. We think that is a reasonable downside target for a summer low.
Saturday evening we published TDG #515, a 32 page update in which we reiterated our near term concern for the sector. We noted that although the bull market may be on pause or may not truly begin for perhaps another few quarters, the industry itself and industry fundamentals are much stronger than in 2014-2015 and could easily withstand a 10% drop in the Gold price and perhaps more. Hence, we are seeing various and numerous juniors performing well or at least holding up well in recent
weeks.
We also concluded that over the next few months we want to buy value and buy catalysts. The ideal buy situation is a company that is a good value, is trading near strong support and has a potential catalyst coming.
Later on, if it appears a bull market is set to begin, that is when we can wade into riskier things such as optionality plays.
Consider a subscription today as we can help you get positioned in the junior companies with significant upside potential at reasonable entry points.
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We seek to own the companies with the best fundamentals that have the best risk/reward potential. We want to own the leaders while avoiding laggards with limited potential.
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Thanks for reading. I wish you all great health and prosperity.
-Jordan
Disclaimer: This newsletter is intended for informational and educational purposes only and should not be considered
personalized and individualized investment advice. Investment in the precious metals sector contains significant risks. You should consult with an investment advisor and do your own due diligence before making any investment decisions. This email may contain certain forward looking statements which are subject to risks, uncertainties and a multitude of factors that can cause results and outcomes to differ materially from those discussed herein.
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