I am working from the hypothesis that markets prices are driven by trends, cycles and random events. Random events are not predictable, but are small and because they occur randomly have a tendency to cancel one another; if they were large markets would lack coherence.
Trends are longer term and can be defined by formulas for nonlinear lines that reasonably fit the data for the period selected. The period for defining the trend needs to be selected so that it is meaningful for the purpose on an analysis; for example, selecting a 500,000 long data set, and fitting a trend to it is meaningless in comparison to the normal life span of a human when making decisions like buying or selling silver that are scaled to small portion of a human life. For silver the significant time period for determining a trend is 1964 and thereafter because silver before 1964 was the measuring stick instead of what is being now measured; silver was demonetized in 1964.
Cycles, as I use them, are oscillations that can be identified in a data series as statistically significant using accepted statistical methods. There are over 250 separate oscillations in the post 1964 history of silver that can be justified as significant and which when measured and then synthetically added together correlate to the actual data.
The synthesis of these oscillations and the trend is the line that is overlaid in the chart I presented, and since it is a calculated line, it can be projected into the future, revealing a statistically probable unfolding of the future. The past does in fact contain the information to understand the future, if only one has the machinery to reveal what is hidden in that data from the naked eye.
The spike in 1979-1980 is commonly believed to have been the result of the Hunt brothers attempt to corner the silver market. Gold was not the object of a Hunt corner attempt, yet it spiked in the same time frame. My view is that the Hunt brothers only inflamed the cyclical driven silver spike that was occurring anyway. Spikes occur on occasion when the peaks in a number of cycles coincide; they occur not only to the upside, but also to the downside depending on how the cyclic forces come together.
My calculations show me that the explosion in price is a predictable event, driven by the convergence of a number of cycles, and as such will unwind rapidly as the cycles that converged roll over also in convergence. The expression, "what goes up must come down", is a description of a cyclical world. "Silver to the moon", is a description of a linear world.
"Bend over and grab your ankles" should be etched in stone at the entrance to every government building and every government office.
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