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On-Sale in 2014: Silver to $16.76, $15.15, then $13.71

By: Joseph Russo | Thursday, December 5, 2013

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:

For long-term investors with self-directed exposure to the S&P 500, Gold, or Silver, the Guardian Revere Trend Monitor is an excellent long-term market timing and alert-service with an outstanding record of accomplishment in keeping its members on the right side of long-term trends.


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Ten more things you can do right now to buffer inevitable shocks of all shapes and sizes:

 

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

Copyright © 2006-2014 Joseph Russo