Really is silver crash

Really is silver crash

Over the past few months later, a huge rally in silver, the price has been stagnant, many traders are talking about the silver rally ended, do finish! Reality, when you are doing for the past few months, there are warning signs, but it is really the end of the bull market silver silver chart?

These articles have been greatly overestimated precious clear conclusions. Today we will look silverâ than cotton, and see if it provides more evidence to support this thesis.

King Cotton. While most people are not aware of it, a year ago Cotton is the second phase of the commodity bull market leader. Cotton is growth in 2009 54% silverâ € ™ 48%. 2010 silver rose 83% cotton and 91% gain the lead. March 7, 2011, 51% of cotton this year, while silver rose by 19% for the year.

Then the inevitable crash. 61% of cotton into bear market, in less than 10 months. Silver took over, and enjoy its brief tenure, the darling of the media a couple of months. April 28, 2011, silver rose by 60% for the year. Through commodity leaders baton (ie, the kiss of death) silver gold, and promptly dropped the next five years 47%.

Let us look at the relationship between annual data to see silver in the past 228 years of cotton.

The chart above snapshot silver cotton ratio required for the annual December 31 (except 2012, which is February 28). All the time for the annual Goldin cotton than in 1979. Silver Cotton proportion December 31, 1979, 0.389. Even to the end of the year the ratio was 0.24 in 2011, when it reached 0.303. This is 99.5% percentile.

It is no surprise to see the silver army that this proportion is likely to continue to rise. In fact, it already has. This argument has been expected, the most recent monthly data points 0.388 February 29 is added to the chart above. As you can see, in February 2012 there is not attributable to the performance of a whole lot of upside TA, if this relationship holds its 228 years of history.

Although this figure gives a good idea of ​​the relationship between silver cotton in the past few centuries, ISNA € ™ t exactly on silverâ manifested in the middle of each year. For this, we sacrifice a bit of robustness (since the monthly data can only be traced back to September 1870) and monthly data used.

As previously mentioned, the most recent data point is February 29, when the ratio is 0.388. This is the sixth highest of 30 September 1870 since 1698 monthly data read out. This is equivalent to 99.7% percentile.

Here are the top six readings and what happened next:

1. February 29, 1980 - 0.427 - which is over 31 years silverâ month closing high. Silver fell for the next 13 years more than 90%.

2. January 31, 1980 - 0.426 - Silver in February 1980 rose by 1.5%, followed by the 90% experienced a crash.

3. August 31, 2011 - 0.393 - no upside. Silver fell 33 percent in the next four months ago to rebound. For reference, silver closed at $ 41.62 per month, so we are still way down from that level.

4. July 31, 2011 - 0.392 - Silver rose 4.4 percent, until next month, said 33 percent of crashes.

5. December 31, 1979 - 0.389 - silver peaked after three weeks, then dropped 91%.

6. Intraday high leap day, February 29, 2012 - 0.388 - Silver has fallen by more than 15% in less than two weeks.

Now let us take a look at the recent silver / cotton than lows.

1. August 31, 1973 - 0.033 - silver will rise 1,452% over the next 6.5 years.

2. February 28, 1991 - 0.044 - This is the month silverâ daily low and the long-term bull market in silver began. Silver will rise 1,198% over the next 20 years and two months.

3. October 31, 2003 - 0.066 - an increase of 877% silver will, in the next 7.5 years.

Buy low. Sell ​​high.

In the end of February, the monthly rate of only 10% from its record highs. This is not € ™ t much upside.

On the downside, a ratio of 0.066, most recently in 2003. This level in February 83% or less.

In summary, the proportion of silver cotton, but more research, summarize, silver significantly overestimated. It is also interesting to note that every silver / cotton ratio has reached the level of February, silver has dropped at least 32% low within three months before the five instances.