Silver’s major, medium-term tops formed in near perfect tune with the same pattern – it was about applying the Fibonacci extension to the 2002 top and the most recent major top. Precisely, the next move was either 1.618 or – 2.618 times greater than the previous move (both starting from the 2002 top). That’s what you can see on the chart above, and that’s what’s pointing to the $120 level.
While I’m at it, I’d like to take this opportunity to reply to a question from one of our Diamond subscribers:
PR would you please tell me with the new push to highs as in both silver and gold do you have any changes with a long-term forecast particularly on Silver and what your thoughts are as to time frames with regarding a correction and then a move back up to New highs? Thank you
Everything that’s happening right now does not change my very bullish thesis on silver. I think that silver’s huge top could be as high as $300 – $500. The $120 target is just an interim one based on the current technical setup and given the good possibility of finally seeing huge declines on the stock market (and a rally in the USD Index).
Timing the Move
However, as you know, based on the Silver Rising book, there are 100 catalysts driving silver higher. It will not be the price itself that likely stops silver from rallying further, but rather most of the catalysts playing out or being cancelled in one way or another. By being aware of them, we’re able to monitor the market and know more or less when the market is close to forming its major top. I think we’re 1-4 years from that final top.
If silver soars to $500, but most catalysts are still likely to activate, adding to volume and no counter-measures are taken against the initial catalysts, then silver could soar higher – even to $1000 or higher.
There’s one more way in which those catalysts are important – if they continue to activate and price temporarily refuses to react to them, it indicates that we’re seeing a local top or one is about to form. Again, knowing the catalysts is crucial for this kind of analysis.
Regarding time frames – given the current momentum, we could see silver at $120 as early as in February or March. However, it’ a big maybe – if the USD Index rallies and gold declines as the above-discussed risk premium diminishes, silver could decline as well. However, silver has its own unique situation – the physical tightness could attract buyers that will once again push it higher. That’s why I’m not exiting the long positions in silver right now.
How big can the correction be? I’d say that silver could decline to $50, and building a strong support there over several months – perhaps bottoming in the summer. But that’s a big guesstimate on my part – not a clear time target – I don’t have one at this point.
Then silver could take another 3-9 months to rally back to the current levels or the $100+ levels.
Also, not all anti-dollar assets are rallying today. The biggest loser? The cryptocurrency sector.