As is evident in the chart above, anyone who purchased silver before August 2010 has done substantially better than those who purchased gold or blue-chip stocks, such as the companies in the Dow Jones Industrial Index. Oddly, you never see this point being brought to the public's attention on CNBC.
Using the Bear's Eye View (BEV) chart gives us insight into exactly what's been happening to the price of silver since it began its bull market in 2002. Remember, a BEV chart is a study of new highs (BEV Zeros) and corrections, in precise percentages, from previous new highs.
Here is something to note about silver; since the start of its bull market in 2002, every time silver has corrected 15% or more, it's taken over a year before it broke out to new highs of the move, as seen in the Bear's Eye View chart below. Whenever silver has corrected more than 30%, it took over a year and a half before it made a new high of the move. The deepest correction since 2002 occurred during the Credit Crisis (58%), after which silver took over 30 months to make a new high. The Chart below gives the specifics in trading days.
In our current correction, silver dropped 44% from its last BEV Zero of April 2011, making this decline the second deepest in a decade. Looking to the past to project silver's future, silver should not be expected to make new high until after April 2013, over a year from now; but I'm more optimistic than that.
One thing for sure, should silver see a new high of the move before September 2012, and particularly before April 29 this year, something historic will have been achieved in the silver market which promises superb gains for silver in the years to come. Will this happen? After the default of MF Global & and the CME last October, it should have happened already. Why anyone would still trade paper metal is beyond me, but they do.
Maybe I'm wrong, but I expect it's only a matter of time before London and Europe will have some bad news for speculators in gold and silver's paper markets. And there is no worse news in a market than discovering the trust between client and broker has been violated; that the trustee of one's funds used your money as a slush-fund for their profits, while sticking you with the house's losses, as regulators stall for time. If Washington's political class doesn't take steps to punish their favorite nabobs with criminal prosecution: yes I mean Jon Corzine and all others who have crossed this line, it's only a matter of time before the NY financial markets see a historic-capital flight from our shores that will leave the American financial media with little to talk about but what money is doing someplace else.