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Gold and Silver price targets

Silver average price and volume

Average annual price of silver on the London Fix (reference and reference) and sales of American Silver Eagles in years 2007 - 2011 (reference and reference).

Historical Silver (London Fix) average prices in U.S. dollars and American Silver Eagle sales

Year
Price
Sales (oz)
2003
$4.85
8,495,008
2004
$6.65
8,882,754
2005
$7.22
8,891,025
2006
$11.57
10,676,522
2007
$13.39
9,887,000
2008
$15.02
19,583,500
2009
$14.66
28,766,500
2010
$20.16
34,662,500
2011
$35.12
39,868,500
2012
--
--

Silver in 1980

In 1980, silver spiked to about $143 per ounce in today's (inflation-adjusted) dollars (reference). (The actual 1980 high was $49.45 on January 18, 1980, but dropped precipitously shortly thereafter to a low of $13.99 on March 28, 1980. The historic low since 1980 was $3.54750 on February 25, 1991, reference.) Here is the Silver 1980 chart.

Greater consumption and investment demand. However, it should be noted that the supply and demand dynamics for silver are very different today. Both industrial and investment demand has greatly increased these last several years, and it is expected to continue. Demand from industry alone is snapping up more than half of the silver mined each year. Moreover, "Every day, the world takes roughly 1.75 million ounces of silver from the earth. But we consume more than 2 million ounces. This kind of consumption is quickly drying up our dwindling silver reserves" (reference).

Greater commodity distortion in paper to tangible asset. It should be noted that the daily amount of silver traded at the Comex (i.e. paper silver) is generally more than 160 times the 2 million ounces of silver consumed each day. And this is only the futures market for silver; it does not include SLV (the very popular silver ETF) and other silver funds. Compare this to oil, which is 5:1 paper to tangible oil, and we see a very distorted futures market for silver.

Greater number of investors with more wealth. Since 1980, the world population has increased by more than 60% (from about 4.3 billion to 7.0 billion individuals). The number of people that are able to participate in the silver metal bull market today is much, much higher today than in 1980 because so many of the people in Asia were prohibited from owning silver then. Not only can people in Asia own silver today, the government of China actually encourages its citizens to own precious metals and even makes them available via state-owned banks. Intuitively, the number of the world population which can own silver today is probably on the order of triple what it was in 1980. Perhaps more importantly, the number of people in the world that have accumulated wealth enough that they could actually use some of it to purchase silver has grown exponentially. In 2009 Merrill Lynch estimated that more than 10 million people worldwide had a net worth in excess of $1 million USD, about 0.15% of the global population, but for the first time since records have been compiled the number of millionaires in the Asia-Pacific region (3 million) exceeded the number in Europe (2.9 million).

Greater monetary supply. Since 1980 the world money supply has increased by a factor of at least 10 and probably more than that, meaning worldwide there is something like 1,000% more dollars, yen, euros, pesos, francs, yuan, etc. in existence today versus 1980. See Global Money Supply Data.

Fibonacci moves since 2003

Silver has made Fibonacci range moves since 2003. The Fibonacci Sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, and so on. Here is the Silver 2003-2011 chart. You will notice that the 2003-2004 breakout move was roughly $3 (i.e. from $5.49 to $8.42), then the breakout move from $8.42 to $15.22 was roughly a $7 ($6.80 to be exact), the 2007-2008 breakout move from $15.22 to $21.34 was roughly $6 ($6.12 to be exact), then the 2010-2011 breakout move from $21.34 to $31.23 was $10 ($9.89 to be exact), and the $31.23 to 49.79 breakout move was roughly $19 ($18.56 to be exact). Thus, we are getting a fibonacci sequence set of numbers--viz. 3, 7 (overshot fib # 5 by 2), 6 (undershot fib # 8 by 2), 10 (undershot fib #13 by 3), and 19 (undershot fib $21 by 2). Given this pattern, the next fibonacci number in the sequence is 34 and, as shown in the table below, should yield a price target of $84 (plus or minus 10-15%).

Breakout date range
Price range
Increase
Fib
Over/Under
2003-2004
$5.49 to $8.42
$2.93
3
--
2005-2006
$8.42 to $15.22
$6.80
5
+2.8
2007-2008
$15.22 to $21.34
$6.12
8
-1.88
2010-2011
$21.34 to $31.23
$9.89
13
-3.11
2011
$31.23 to $49.79
$18.56
21
-2.44
2013 (projected)
$50.00 to $84.00
$34.00
34
--
2014-2015 (projected)
$84.00 to $139.00
$55.00
55
--

The Fibonacci Time Zones from 2006 high of $15.22 (in 5/7/2006) to 2008 high of $21.34 (in 3/2/2008) is 22 months, from the 2008 high to the first 2011 high of $31.23 (in 1/2/2011) is 34 months. This suggests that the next major fibonacci event is 55 months from Jan, 2011 or the summer of 2015. However, the other major high in 2011 of $49.79, was likely a reset of the time sequence. Thus, with the reset fibonacci time zones, we get April and December of 2012 as time periods to watch for possible tops, then December of 2013 or January of 2014, and finally a top in the June to September 2015 timeframe.

German Marks in 1919 - 1923

German Marks needed to buy one ounce of gold in the period 1919 - 1923, illustrating what a hyperinflationary event looks like.

Date
German Marks
Projected
Jan 1919
170
Sept 1919
499
Jan 1920
1,340
Sept 1920
1,201
Jan 1921
1,349
<-- We are here
Sept 1921
2,175
<-- End of 2012
Jan 1922
3,976
<-- 2013-2014
Sept 1922
30,381
Jan 1923
372,477
Sept 1923
269,439,000
Oct 2, 1923
6,631,749,000
Oct 9, 1923
24,868,950,000
Oct 16, 1923
84,969,072,000
Oct 23, 1923
1,160,552,882,000
Oct 30, 1923
1,347,070,000,000
Nov 5, 1923
8,700,000,000,000
Nov 30, 1923
87,000,000,000,000

Notes: