After silver’s flash-crash at 7:05 pm on Thursday, our sister fund is extremely bullish on gold & silver. Here are the 3 main factors.
- Silver is at a massive support level.
- Gold:silver ratio is a big bullish factor for gold/silver.
- Our sister fund’s model…
*Gold and silver move in tandem. When silver makes a big rally, so does gold.
*Let’s ignore all the talk about silver manipulation for now. Let’s be objective and focus on the facts.
Silver is at its 200 MONTHLY moving average support
Using Thursday night’s flash-crash, silver fell to its 200 MONTHLY moving average support. Historically speaking, silver’s 200 monthly moving average has been THE bull/bear defining line. You can see in the following charts that a lot of massive rallies and massive declines occurred after silver hit its 200 monthly moving average.
Silver’s first post-bubble rally occurred when it hit its 200 monthly moving average in mid-1982.
After falling below its 200 monthly moving average in 1985, silver turned this into resistance in 1986-1987.
Late-1990s to early-2000s
During this period, silver was constantly crushed by its 200 monthly moving average. When silver firmly broke above this resistance in 2004, its bull market really began.
Silver touched its 200 monthly moving average in late-2015. That was followed by a massive rally in precious metals in 2016.
Silver fell to its 200 monthly moving average again on Thursday’s flash-crash. This is a massive support.
Gold barely fell while silver crashed on Thursday night. At the bottom of the crash, the gold:silver ratio was 85.
*The gold:silver ratio is used as a contrarian indicator. When the ratio surges and is insanely high, it’s a bullish sign for gold/silver.
Many of gold/silver’s MASSIVE historical lows occurred when the gold:silver ratio reached 85. These massive lows included bear market bottoms.
Ratio reached 85. Gold/silver had a massive rally in early-1987.
Ratio reached 85. Gold/silver then made a 2 year flat bottom before rallying for 5 years.
Ratio almost reached 85 in 2008. That was the bottom of gold/silver’s bear market, which was ensued by a massive 2 year bull market.
Gold/silver had a massive rally in the first half of 2016.
Our sister fund’s model
Our sister fund’s model is designed to catch the exact bottom (or close to the exact bottom) of big declines. This is used for silver’s bear markets, although there were a few cases in which the BUY signal came out during bull market corrections.
The signal came out on Thursday’s flash crash. This means that even if gold/silver are still in a bear market, there will be a massive rally.
Here are the model’s historical BUY signals. They’re insanely accurate.
- November 5, 2015
- June 20, 2013
- December 29, 2011
- September 23, 2011
- November 13, 2008
- June 15, 2006
- April 29, 2004
- July 7, 1997
- March 8, 1982
Let’s assume that our sister fund’s discretionary outlook is wrong. Let’s assume that gold, silver, oil, and commodities are still in bear markets. Even under a bear market scenario, gold and silver will make a big rally.
Hence, our sister fund is still 100% long USLV (3x silver ETF).
*Good investors/traders need to always consider the worst case scenario.