Another Techincal Analysis modeling of Silver's target price.

Silver is dirt freaking cheap right now IMO.   It's cheap historically and its cheap on an inflation adjusted basis and it's cheap relative to its historical relationship with gold.  In the low to mid $20 range, silver is just cheap, cheap, cheap right now.  As the global economy unwinds people are going to rediscover the precious metals in a way that few think is possible over the coming years.  I think it is impossible for this metallic ascension not to happen.  It must happen IMO.  It is the only path away from a scam ridden global money supply.

Remember when I wrote that solar companies were in the middle of a Great Depression of their own?  Remember what I wrote would happen when they finally bottomed?  Remember the initial call I made on Sunpower bottoming wherein I called the solar industry a "screaming buy"?  Well, that call was within 7 cents of the bottom for Sunpower and it since went up to nearly $30. 

I want to focus on one post in particular, the one where I suspected that Sunpower (SPWR) was about to form a cup with handle.  You can read it here but in short, the stock was trading at $19.64 and I predicted that it would fall back to as low as $12 or $13 before rising again up to  "$30 or $35".  After I made that call, the stock fell back to $18 and then ran all the way to $28, only $2 from my target price.

The reason I made that call was because I thought that a Cup With Handle formation was in progress.  With that background, James Turk is now on record saying that he sees a cup with handle formation in the long term silver chart.  I cut and pasted his chart (shown at left) for those who don't feel like clicking the links.

This chart is a actually more bullish than the other 2 price targets of $100 that I provided technical analysis models for a couple days ago.  If Turk is right, the price of silver will eventually skyrocket to over $200.   The model says that you add the height of the bowl, which is about $45, to the breakout point.  But that is when it is charted on a linear vertical scale whereas the one provided by Turk is charted on a log vertical scale.  So I think you can draw a line from the lowest point in the cup to the top of the cup and then move the line to the breakout point and then read the price target on the log scale as shown below.

While I am not endorsing this Cup With Handle model as my primary target right now, I will say that it is quite possible to occur because that is how bad of trouble the global fiat currency system is in and there is no cure possible except massive devaluation of paper assets.  When this happens, real, in-hand assets which themselves have no liability will increase in value on a relative basis.  Note that housing has the burden of taxes.  It also has the burden of only being purchased with credit at a time when the global credit markets are teetering on the brink of collapse again.  Thus I do not see real estate as a good shelter from future inflation.