Silver's Scary Chart

Silver, like many of other commodities has been bubbling quite a bit for the past 12 months, and sentiment is extreme. Here's a chart I found on ZeroHedge:

Well to me vertical rises are very suspicious in nature, and the fact that this chart showing the bubble-bust of the late 70s near the current bubble-not-bust-yet makes me wonder how much longer this can be going, and if doesn't go much longer, and looking at the collapse of the early 80s, how bad and rapid the drop can be.

Ironically, the post from where I got the chart is stating: While silver is up 22 percent this year and is heading for a ninth straight quarterly advance, its fundamentals remain very sound.

This sentence is the exact same thing we were hearing about the economy back in 2007 and 2008 when the mortgage market was melting down: "Do not worry about the subprime, the fundamentals of the economy remain very sound." or "Do not worry about the failure of many mortgage lenders, our banking system is very sound".

Disclosure: As of today, I am short medium term out-of-the-money puts on Silver.


Dave Narby said...

Given that there is no Volker at the Fed to raise interest rates to the roof and save the dollar; I suspect we will see a correction, and then the real moonshot.

This is not the '70's.

Anonymous said...

But what does that chart look like when adjusted for inflation?

pej said...

Honestly, I don't know what will happen from here. But one thing is for sure: not many people will make money out of this: most people will either come in too late, or get out too late, or short too early, etc. etc.

To answer "anonymous", the chart should be adjusted for inflation, but also for production and known out of the ground reserves. Data I currently don't know where to source, but happy to do if anyone knows where to find it...