2002-2016 Silver Comparison

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Unfortunately, I am seeing great similarities between now and 2002. In 2002, there was still a lot of talk about how Warren Buffet had purchased 100 mm oz in 1998, driving the price up to $7.50. in 2001, silver made a low of $3.50 ish 4 years after the Buffet peak. Silver now just spent 4 years coming off of the 2011 $50 peak. In the first 6 months after the bottom, silver made it up above $5 and it was a well cerebrated milestone, very similar to $20 now.

“Everyone” knows silver is a long term buy under $20, just like everyone knew that under $5 was a bargain. It was so obvious that $5 would fall, it was expected that it would fall easily. It did not. The first half of 2002 silver broke up through the 50wma and found the top just above the 200wma. The second half of 2002 was spent re-testing the 50wma. It wasn’t until a full year later that 5 fell and silver started going parabolic. Silver rose about %50 off of the bottom in 2002 from $3.50 to $5.25. In 2016 it went from $14 to $21 – a %50 increase. I thought I would never get silver for $4 after breaking $5. I was very fortunate to be able to have bought what I did then; just like I can’t really envision $15 silver again, let alone have a year to accumulate anywhere near that price.

The weekly RSI hit 70 in mid 2002 for the first time in a long time, as it also did just recently. This was followed by a sharp drop to about 40; it’s at 55 now. The RSI highs and lows have been much greater in magnitude than those prior to 2002. I feel it would be prudent for the extremes to continue to grow in magnitude. For example, the run to $50 was orders of magnitude greater than Buffet’s run to $7.50.
One major difference is that the GSR was at a bottom in Jan. 2002, and it was at a top in Jan. 2016. The GSR is much more like Jan. 2004 than 2002. In 2004, the GSR broke below the 50WMA and the 200WMA, then retested the 50 and started falling as the 50 crossed below the 200. When the GSR breaks the 200 again, it will be a huge silver buy signal.

One of the most sticking comparisons between 2002 and 2016 is the double tops during June and July. 2016 being at the end of the months and 2002 in the beginning and middle of the month.

The resulting pullback in 2002 retraced a little more than the Fibonacci 61.8% of the move from the bottom to the top.

The same move now would take silver down to the 200DMA at $16.38.



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