If the bottom is in for silver, let's talk target prices.

At the very real risk of getting ahead of myself, I want to put some more color around potential target prices for silver in the coming years.  In past posts I have mentioned a $75 target price for silver on multiple occasions but of course those were very coarse estimates which were more gut feel and experience than technical analysis.  Gut feelings are how the herd generally goes astray so there should certainly be some sort of technical charting to back up any price target predictions going forward.

But before going there, please, suspend disbelief for a minute regarding about what you are about to read, no matter how outlandish you might think it to be because there are very good fundamental economic reasons why metals will go up drastically from current prices.  Right now the global economy is in completely uncharted territory and the global monetary system itself is like a 747 that has run out of gas at 30000 feet.  The reason it must eventually crash is because we allowed the con men to convince us that an honest monetary system could actually have no capital in it (AKA "fiat currency") and that we could run our affairs completely off of debt forever.  That is no more true for the world than it is for the US or Europe than it is for a private individual who would like to live off his credit card forever.  A debt Ponzi has been in play for decades and all Ponzis eventually collapse.

As soon as the credit runs out, expect the entire monetary system to buckle and then collapse under the strain.  It is certainly buckling right now!  I don't know exactly what "collapse" will turn out to mean but I know it will not be good for anyone who is owed anything.  It will certainly involve lots and lots of defaults of all kinds.  Promises of all kinds will be broken and there will be all manner of excuses and apologies for it but it will not change the outcome.  Default is default.  Screwed blind is screwed blind.  When you hold precious metals, nobody owes you your money because you have it in your own hands.  Therefore they cannot default on you.  These metals are universal money because they can be converted into the paper currency of any country on the planet any day of the week.   I hope that people reading this blog understand that money metals are the only sure thing in a defaulting global monetary system.

OK with that said, let's look at some price targets.  I found one very interesting EW interpretation at this location.  The chart in question is below.  The author of this chart (who is not me) believes that

silver just formed the 4th wave of an expanding triangle.  I do see this as a valid EW model although it is not the one that I had in mind.  Still, it's always good to see what others are thinking in these matters.

If this author is correct (and it appears at this point that he recently predicted the bottom correctly), the typical next move would be to the top of the rising channel.  In this
scenario, the chart would typically either kiss the top of the channel and then head back down or break out of the top of the channel (a Elliott wave "throw over") and then come back down into the channel to begin the next bear market.  Since the author's chart is not large enough to show the top of the channel in the place where the chart is likely to hit, I have taken his chart and made adjustments so that possible next targets can be identified.  The result is what appears above.

That chart predicts a target price for spot silver of about $100.  I could easily see $100 being a big psychological barrier for silver at that point.  If the chart moves up like that you definitely want to sell into the resistance IMO and then put the cash into some income producing real estate that should be nicely beaten down by then if interest rates continue to rise (and I think they will).

If that chart looks too crazy to possibly happen, please note that this pattern plays out all the time in the real world.  Here, for example, is a textbook expanding triangle that happened in real life.  In fact, it has happened so many times throughout history before that they gave it the official Elliott wave name "Expanding Triangle".  This is not some rare, unlikely to happen occurrence.  It is, given the chart to date, one of the more likely scenarios that I have seen so far.

Another possibility is the one I have been pushing for some time: that we just finished very large first wave and then a 2nd wave pull back and are now set to see a massive 3rd wave.  In truth, the target

price for the expanding triangle scenario is not much different from the 3rd wave scenario which I show to the left.  Again, something north of $75 seems easily doable.  The main difference between the two scenarios is what happens after the $100 price level is hit.  In the first case, 5 waves have transpired and so a large a-b-c downward is to be expected.  You will probably not want to sit around while that happens IMO.   In the second case, we just had a vee type pullback so I would then expect a sideways move of some type.  In this scenario you could just sit in silver and wait for the following 5th wave to hit without too much anxiety since the pullback from $100 might only be $20 or so.  With silver you have to expect that kind of volatility.

One scenario that we can likely discount at this point is that we just finished a 4th wave.  The risk of a 4th wave here would be that the next wave up, #5, could be a failed 5th leading to a massive double top (or declining double top).  Not having to worry about this scenario is going to give the Elliott wave trading computers more confidence to press the bid in the $50 region.  Once $50 is broken with gusto, everyone will begin to pile into the metals. So why can't it be a 4th wave that just finished?  Simply because a 4th cannot dip down into the region of a 1st wave per EW rules.  So the following chart would be invalid:

This is a LOT of forward speculation.  I know that.  I also know that whatever happens, silver is cheap, cheap, cheap right now and that it will not stay cheap forever.