In 2001, the more than twenty year long silver and gold bear market ended with small bullish seeds being planted. From that small beginning, we can see a spiraling cornucopia of rising prices in a repeated pattern of higher lows followed by much higher highs. The higher lows are here and now. This is the part of the cycle where we can practice our skills to buy low. Prices may, or may not, drop lower in the short term, but the Optimist can promise that short term opportunities will not last forever. As the calendar marches ceaselessly through the medium term and into the long term, investors of the future will look back with pride at the trophies they captured by action in this time frame, or they will sing remorseful songs about woulda, coulda, shoulda.
How high is up?
If history is a guide, we should soon see rising prices again. Then the incessant question will be how much higher will prices go? The Optimist's possible price projection for 2007 seems like a reasonable guess, but the charts offer calculated numbers that are worth considering. By extending the line of highs from 2001 into the spring of 2007, we find that silver could trade above $17 and gold could be higher than $800. Those possible price targets on a logarithmic chart will increase exponentially with additional time to the new highs ahead.
A bullish moderation
Observant readers may point out that silver and gold highs cannot continue forever to rise at a faster rate than the rising lows. If the cornucopias drawn since 2001 could keep rising at the same pace, then highs would eventually be double the lows, or ten or even 100 times the ever increasing lows. That seems intuitively unlikely, so the Optimist anticipates that over time, the highs will increase at a somewhat reduced rate, and the lows will increase at a faster rate to moderate the ratio of highs divided by lows. The prospects for a faster rise in the low prices ahead provide even more incentives for capturing a large position of lows now, because these current low prices will look like great bargains in the years to come. Cheers!