Charting Silver

by | Dec 20, 2010 | Howard Katz | 27 comments

Do you LOVE America?


    Right now commodities are where the action is in the financial markets. And the precious metals are where the action is in the commodities market. And silver is where the action is (for the time being) in the precious metals markets.

    Silver can be described as gold’s little brother. It lags along behind gold, underperforming for a long time. Then, all of a sudden, it comes to life, makes up all of its underperformance and goes on to exceed gold to the upside.

    Gold has a reputation for stability and conservatism. Silver is volatile and subject to big price moves – both up and down.

    The key technical measure on silver at the present time is the price objective line, which started in March 2008 at 21. Technical theory does not say when silver will reach its price objective, only that at some point it will. Further, this is a minimum price objective. The commodity may get up to the objective line, back away for a while and then make a second return to the line.

    Charting Silver Trends

    The chart on page 1 contains a great deal of information about the course of the price of silver over the next few years. But to understand the chart properly, it is first necessary to be able to read…THE ENGLISH LANGUAGE.

    I am sure that, when you were back in the 8th grade, you used to grumble about your English course. “What use is all this stuff anyway?” “I can read OK. What I want to do is to get into the real man’s world where they are making money.”

    Well, here you are in the real man’s world where we are making money. (I moved from gold into silver in mid-September of this year held for the big autumn run-up, briefly stepped aside in November and then reestablished my silver position.) And your instructor is telling you that one of the requirements is the precise use of the English language. Your 8th grade English teacher was right.

    The price objective line in silver is full of information, information which can make us the big bucks – if it is interpreted correctly. First, a price objective line, which occurs with regard to a triangle, is different from a price objective point, which occurs with a head and shoulders, a rectangle, a flag or pennant, etc. The point gives us one number. The line gives us many numbers spread out over time.

    For example, a pennant formed in silver in November with a price objective of $40 (probably by mid-February). This is one number, simple and easy to play. However, the price objective line for the ascending triangle in silver on p. 1 is continuously rising. It is about $60 right now. It will be at $100 in January 2012, and by Sept. 2012 it will be at $150. This does not mean that silver absolutely has to get to one of these points. But it does have to get up to the line at some time. Clearly, the nearer points on the line will be exceeded, but the further points will never be attained.

    Here is where I have difficulty and plead for the help of the English teacher. For example, I may make the statement above, “The price objective line in silver will be at $150 by September 2012.” Indeed, this is a true statement. But some subscribers will read this as, “Silver will be at $150 by September 2012.” This is a much simpler, but wrong statement. It is so much easier to deal with the simple than the true. It is sort of like the case of the policeman who comes over to help a drunk looking around in the gutter. “I lost my car keys” says the drunk. So the policeman helps him look. After they have looked for a while, the policeman says, “Are you sure you lost them here? And the drunk says, “No, I lost them in the middle of the block.” So the policeman says, “Then why are we looking here?” And the drunk says, “The light’s better here.”

    This technique does not work too well for finding lost keys, and it certainly does not work at all well for taking money out of the commodity market. You cannot neglect essential elements of the puzzle simple because “the light’s better here.” This is what I mean by precision of language, and if you did not learn this in 8th grade, then go back to your teacher, beg her forgiveness and crack the books on a special study course to learn now what you should have learned then.

    As noted, silver is more speculative than gold. As a result, when the precious metals markets are conservative, traders move into gold. During such periods gold will outperform silver. For example, starting in 2008 the media in this country started screaming “deflation.” Both gold and silver got hit hard, silver worse, but they recovered quickly. In Sept. 2009, gold broke out of its ascending triangle to the upside. A year later silver did the same thing. By that time, gold had advanced by 25% (March 2008 peak to early Sept. 2010), and silver was flat. (OHE was able to remain in gold for the period up to early Sept. 2010 and then switch to silver at that time.)

    A move in silver will normally last half as long as the corresponding move in gold and peak not too far apart from it. (In early 1980, gold peaked in January; silver peaked in March. The gold move of the late ‘70s lasted 3½ years. The corresponding silver move lasted 2 years+.)

    A move in silver is a lot of fun because it has great volatility to the upside, but this often happens with regard to commodities. Special situations develop, and there is simply not enough supply to meet demand. A case in point was early November when silver peaked at $29. The silver bulls had been making money through the autumn, and they kept plowing this money back into the market. The more money they made the more they plowed back, and the cycle built on itself.

    Obviously, this cannot go on for too long. Either the exchange will cool things down by raising margin requirements or fundamental traders will come in with large sell orders. Either way, the sellers can break the market, and …watch out below.

    By the way, there has been a group of people going around the gold/silver web sites alleging a giant conspiracy to manipulate the price of silver in a downward direction. And I am getting sick of this. To manipulate any free market is virtually impossible. If one buys an economic good and then tries to manipulate it higher, one must spend an enormously greater amount of money doing this than one can reasonably make. And there has been no successful manipulation on record in economic history.

    First, this was proven by the free market economists. Second, it was tried by Bunker Hunt in the late 1970s. This idiotic venture cost him almost $6 billion of his father’s inheritance money (the H.L. Hunt fortune).

    Anyone who wants to make money in the speculative markets MUST anticipate some other people coming in to buy his good away from him at a higher price. If you can’t see that coming, then you should not be in that market. I see people coming in to buy gold and silver away from me because Presidents Bush-Obama have been printing massive amounts of money, and this will cause all goods to skyrocket in price with the precious metals first on the march. But this is reality, not manipulation. And, quite frankly, a scheme as fantastic as is being alleged, is nothing more than the invention of crackpots. No one can manipulate market forces for 10-20 years.

    If you are listening to these allegations, then you need to wake up and study basic economics. Good speculation has to be based on economic principles. If you don’t know what you are talking about, then your chances of making it in the markets are not equal to a snowball in H___.

    Since gold and silver will probably peak at about the same time, I will be looking for signals from both the chart on p. 1 and below to coincide.

    Charting Gold Trends

    We are in the middle of a powerful move in the precious metals markets. These markets are on fire, and now is the time to strike while the iron is hot. You all know that Ben Bernanke is completing a program, called QE-2, which will result in an approximate tripling of the U.S. money supply from mid-2008-mid-2011. And this will lead to an approximate tripling of the U.S. price level within the coming 2-3 years. It is to help you protect yourself and make profits from this massive creation of money that the One-handed Economist is focusing on the precious metals markets at this time. If you would like to subscribe to the One-handed Economist ($300/year), then go to my web site,, and press the Pay Pal button. Or, send $290 to: The One-handed Economist, 614 Nashua St. #122, Milford, N.H. 03055 ($10 cash discount).

    Thank you for your interest.


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      1. I would have made more fiat if I invested in cotton this year but I’d have a hard time storing all of that cotton……  Besides, if I wanted to buy cotton or linen I’d save my dollar bills.

      2. “By the way, there has been a group of people going around the gold/silver web sites alleging a giant conspiracy to manipulate the price of silver in a downward direction. And I am getting sick of this. To manipulate any free market is virtually impossible.”

        Are you insane? You trade silver and you are saying there is a conspiracy? free market? What free market? “have you ever even looked at the short positions held in precious metals by HSBC and JP Morgan? JP morgan is the FED’s bank. they supress Silver to perpetuate the fiat dollar ponzi scheme. What other reason would JP morgan have to stand in the way of the undervalued silver, but to support the FED? I like a lot of your color and commentary, but there is a conspiracy, and there has been for 10-20 years. You really need to educate yourself on this. Check out Zero Hedge, they comment on it a lot, and it is actual / credible research and evidence.

         They(JP) have at times more in short positions on the COMEX than exist in the bullion vaults or even silver IN THE WORLD. And the COMEX allows this!! How is that NOT a conspiracy when even as a hedger, you need to hold at least 90% of the phsyical commodity.

        Once you really do your research, you will see that there is a conspiracy which just makes the fundamental case for silver even better.

      3. As to whether or not the market has been manipulated for decades – he says it’s laughable – I fail to see why that would be so ridiculous to contemplate given the resources available and the level of corruption in the government, by corporations that use silver in manufacturing and by the military industrial complex, that uses massive amounts of silver as well.

        And I don’t see Ted Butler and Bob Chapman (amongst others) as crackpots.


      4. Oh great…  I just spent 10 minutes of my life that I’ll never be able to re-live to read what amounts to an advertisement and a solicitation for $300.

      5. I thought the iron was hot when it was $7.  I have both hands on the horns.  What a ride!  I believe the Hunt brothers would have cornered the market if the gov hadn’t gotten involved.  This time might just be different, been waiting all of my life.  I guess I’ll go out and buy one.

      6. there is absolutely no manipulation of american stock exchanges. does anybody in their right mind seriously believe that j. p. morgan or other giant wealthy investment banks would deal in naked short selling of silver to artificially depress silver’s market price.  i totally reject that j. p. morgan would even consider doing anything dishonest or immoral like manipulating silver or throwing babies and children of starving parents out of falsely foreclosed mers contract homes just before christmas. 

        when the silver market exploded in 1980 it was due to the equinox of the sun and moon coinciding with the off angle meridian of jupiter and mars. the hunt brothers had nothing to do with this manipulating this explosive  asset price increase. the patriotic god-fearing hunt brothers were were innocent victims of dastardly false rumors caused by  jealous competitors  and disgruntled ex-employees.

        god bless j. p. morgan and it’s forthright and esteemed ceo jamie diamond.  jamie as well as his friends at goldman-sachs are truly doing god’s work.

      7. I’m waiting for the eclipse of the moon Pink Floyd.  Another brick in the wall.

      8. You need to read faster Randy.

      9. manipulation is easy in fractional reserve games… sell more gold claim checks than what you truly have.

        even insurance giants play this game.

      10. I wish I would have been in the game when it went to $5o & over $800.  Who says JC didn’t understand economics 101.  Look who doesn’t understand economics 2010.  People wouldn’t understand $50 now.  Let alone $180.  Charts do work.  “Speculator paper investors” set their computer stops to them.

      11. I believe that gold will be silvers little brother some day but only when they devalue gold in the nwo.

      12. I don’t think they will devalue gold or precious metals after imposing the NWO on US. I believe that they will artificially peg a basket of precious metals much higher to support their new fiat money.

        I got mine. Get yours.

      13. Gold is said to be a hedge against inflation; silver is the poor man’s gold. In the immediate aftermath of a true SHTF situation or a crash of the US $, nobody is going to be accepting either silver or gold; it will all be barter, if anything. It is only after things have had a chance to settle down a bit that gold or silver will be addepted as payment for anything.

        ‘Trash’ silver coinage, pre 1965 dimes, quarters and half dollars, badly worn/no numismatic value, will be the primary medium of exchange. I doubt is anyone will be willing to make ‘change’ for your 1 oz. gold coin.

        Everyone PLEASE enjoy this Christmas to the utmost; it may be the last one that the United States and its people will be able to enjoy as a traditional holiday season. God Bless and good luck to all.

      14. Sorry for the typo; accepted – not addepted.

      15. “By the way, there has been a group of people going around the gold/silver web sites alleging a giant conspiracy to manipulate the price of silver in a downward direction. And I am getting sick of this. To manipulate any free market is virtually impossible.”

        This is just one of the many reasons why I cancelled my subscription to Katz’s newsletter.  Anyone praising the “free markets” in this environment either doesn’t have a clue or is shilling for the big banks.  THERE IS NO SUCH THING AS FREE MARKETS WHEN GOVERNMENTS PRINT ENLESS AMOUNTS OF FIAT CURRENCY AND DOLE IT OUT TO THEIR BANKING BUDDIES TO MANIPULATE MARKETS.  As a side note, the track record of HK’s picks are about the worse I’ve seen in the PM newsletter space.  I know this because I was a subscriber and was shocked at the performance of his picks in this major bull market.  The Dines Letter is my favorite pick among newsletter writers in the PM space.  And no, I am not associated whatsoever with TDL other than being a paying subscriber and somebody who has benefitted greatly from it over the past year.

      16. So, you think the “new money” will be worth less gold/silver in the nwo?  That’s an interesting concept!!!!!!  You don’t think gold could go down from 10K to 5K after the nwo……  “nobody is going to be accepting either silver or gold”  Small minds think a like.

      17. MadMarkle, YOU have a handle on it! Couldn’t have said it better myself.

        Gold and silver won’t save you in a severe crisis. However, guys like me might help ease the pain a bit. I might just see how much gold a starving man will give for a two liter bottle of rice/corn/wheat. Since I have about 100 of each of them. “OK. Give me all your gold and all your guns and I’ll give you a two liter of each wheat, rice and corn.” If you’re hungry enough, you might not do it, but, what if your kids are hungry?

        Forget silver and gold. Your SHTFPlan has to be balanced with varying parts of:


        If you are deficient in any of these areas, you’re not ready for whats coming.

        Now, if you’ve got the 6Gs and you’re just playing, play with silver. You’ll make more Fake Racket Notes with it. A 10% one day rise of fall is not unheard of with silver. I trade the SLV for fun.

      18. Anon: Its hard to say what the price of pm will be in relation to a new fiat money. I think it kind of depends on the event or process that ushers in a “new global money”, and when that occurs. Right now the gangster banksters benefit tremendously from the currency exchange trade. I don’t think they want to kill that goose.

        You are assuming that gold and or silver reaches those highs and that’s ok with me because I have a small pm mine; but I am not certain they will.

        FDR repegged the price of gold higher. And there isn’t enough pm now to cover all of the fiat money in the world unless it is pegged higher and controlled by a Global Central Bank which both the IMF and World Bank aspire to be.

        Big Brother wants global government. Global government would control the bankster gangsters to some extent. I don’t think they want that anytime soon.

      19. And  JEFF1 takes the Gold Medal:


        I was thinking exactly the same thing, when I read your comment. 

        Howard Katz said, “And there has been no successful manipulation on record in economic history.”

        Those are strong words.

      20. Comments…..I think the key word in these posts is volitile. No matter what the conditions are, everything has a price or value, and gold and silver will find theirs no matter what.  But, food, water, guns, medicine, and etc, could beat those metals in value with the right circumstances.  it’s all about timing, and volitility.
              To hedge  my bet, I choose to hold a bit of all of them.  That way, I have the best chance of saving my arse. 

      21. Gold & silver just sits there.  It doesn’t have to do anything.  That’s the beauty of it.  Even Goldenfox has that right!  It will take more fiat to buy gold/silver in the future no matter what.  Some people say it is in a bubble.  Yea right….  The dollar is in a bubble.  The nwo will devalue gold & silver or they wouldn’t go to the new world order money.  It’s just that simple.  They will, when it becomes worthless after the war.  DK says to forget gold/silver but buy gold.  Hmmmmm.  PM will be a bubble too, some day!  This will be the bubble of the life time.  The trick is to get off of the other falling bubbles & jump on the only ones that are going up.  Energy, food, & pm’s.  Which one can you “store”  without it going bad or costing you money after you are “balanced”.   Playing with SLV may be fun but your playing with the bear.  I always wanted to eat some bear meat.

      22. Anon:  “DK says to forget gold/silver but buy gold”.

        Tell me please, Anon, where did I say that? This is just another example of some commenters ascribing to me, or others, things that I , or others, haven’t said.

        People, please do not project YOUR rant, perception, or interpretation  onto me.  Frankly Anon, I don’t know how you could read what I said and then quote me as saying what you did. How is that possible?

        Is it any wonder that Jane does not want you to mention her name in your comments. What are you smoking tonight, dude?

        Anon: If all of the fiat monies collapse, the global PTB will have to replace them with a currency that has real, intrinsic, acceptable value and return everyone to a pm standard so that global commerce could continue. All of the Central Bankers are buying tons and tons of gold toward that day. PM will not be devalued when that day comes. The IMF just sold another 400 tons of gold to other countries.

        If that day comes, or when that day comes, given the supply and demand for pm, and the need for paper or electronic money, it is likely that the Central Bankers will artificially raise the price of certain precious metals without major industrial uses, like gold and platinum, to support the new global currency. Read: SHTF Economics at SHTF America.

        Then get yours. I got mine.

      23. My bad on this one DK.  My apologies.  Net Ranger said that.  Who is Jane?  Think you have me confused with somebody else.  I don’t believe fiat can ever have an intrinsic value, but maybe a perceived value.  If this fiat collapses, I not sure that most people would want to accept another fiat unless forced.  No drugs here. 

      24. ANON: No harm, no foul. “fiat” may not be the right terminology here, because I expect the NWO currency to be “based upon” and “supported by” precious metals: gold and platinum in particular. I still think that scenario is a long, long way, away.

        The US “supposedly” has 8,000 tons of gold (see: Yamoto’s Gold) which we confiscated in WW II. China, Russia, and others are far, far behind, although both countries purchase all the gold from their respective in country producers. China is the largest gold producer in the world, Russia in the top 5 for sure, may be top 3.

        Conceiveably, the major powers and gold producers (pretty much one and the same) could get together and establish a world currency and ascribe a new value to PM’s. That value would be considerably higher to support the new global money.

        Not going to get into the details here, but that does seem to be the plan of the IMF and World Bank. See: SHTF Economics. In the near term I do not see gold going a lot higher; but believe it will eventually. Buy on the dips, sell some on the spikes.

      25. ANON: Who is Jane? We are still trying to figure that out, but we think she may be the re-incarnation of Attila the Hun and three paces to the right. 🙂

        Jane is ok.

      26. When I hear someone in the PM field say that there is no manipulation in the precious metals markets, then I have to dismiss this person as a dupe or a disinfo agent.  Just like Julian Assange saying that he’s tired of “unsubstantiated” 911 conspiracies – my disinfo BS meter goes off. 

        Although Katz has some reasonable commentary about TA for a quiescent world, that method of analysis is no longer operative in a financial world fraught with fraud, manipulation and sleight of hand.  Even fundamental analysis is suspect in its short term forecasts as the ship of financial state wallows, tilts and founders on the rocks of hard economic realities.  The only thing one can do is focus on the inexorable and pay no attention to the ridiculous manipulations on the way to the inevitable.

      27. Comments…..There is approximately 10 times more face value of  derivatives than the total value of all property in the world. These are controlled by too few to conclude that there is no market manipulation in either commodities or equities anywhere in the world.

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