Saturday, March 28, 2015

2015.03.27 Silver Cycle Model Chart

2015.03.27 Silver Cycle Model Chart


















The silver cycle model is performing reasonably well, and suggests that the March/April maximum in price may have already passed. We are looking for a minimum in the July/August time frame at $1400.  Below is the silver cycle model run from 2014.12.12, also on the blog here.


2014.12.12 Silver Cycle Model Chart

4 comments:

Anonymous said...

Thanks for this! How do you explain the divergence between the gold and silver model during the period April to June 2015? Thx once again!

Paolo said...

You are welcome. I cannot explain the divergence, though in this case 'explain' may be too strong a word - it's more like an opinion. Based on historical cycles in the two time series, there may be times when silver supply increases relative to demand during economic slowdowns, whereas gold serves a monetary function when there is lack of trust in a government. A convergence of these two occurrences might give this result. Of course, one or both of these models may also be seriously flawed!

Anonymous said...

Thanks again Paolo - much appreciated indeed. The divergence is indeed perplexing, especially as silver has responded more bullishly in the past few weeks.

Looking back at the weekly charts to mid-2009 on Finviz for both silver and gold, is there is general correlation but with precedent for divergence.

As only one isolated data point: silver was around the same price in mid-2011 as it was at the start of 2010, while gold was approx 23% higher. It should be noted that the falls of 2013 reestablished matters.

My only concern is the projected price of gold to nearly 2200 $/oz later this year! I'm bullish on gold based on volatility action, but I would be truly astonished at such a rise, especially in the face of central bank actions. It would be exponential on a weekly chart with shades of bubble behaviour, although Paolo would earn an "Awesomeness of the Year" award.

Mr. Anon :-)

Paolo said...

The silver/gold misalignment going forward is highly annoying because it calls into question the possibility that one or both of the models, gold or silver, is way off. Since the gold model suggests a relatively constant increase in prices going forward, this is going to be interesting. Again a reminder - this model seems to reverse at Z-scores approaching +/- 2.5-3.0. Mr Anon, I am hoping that I don't have to throw this model into the same can as the failed DJIA model!