Is the precious metals bull market over?” This may be the single most important investing question that we can ask ourselves. Why?
If the bull market in silver and gold is not over, then the current setup would likely be an extremely big buying opportunity. 

 

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One way to measure if a bull market is over is to compare it to historical bull market movements. For example:

In the above chart we compared the 1980’s gold bull market top to the top in gold back in 2011. At first glance this move looks quite impressive, but how does it compare to other bull market “Top to Top” measurements?

The above chart compares one bull market to another by measuring the price appreciation from a bull market top to that same markets next bull market top. When we look at the “Top to Top” maximum appreciation in the current bull market compared to the other past bull markets we can see that significant upside potential may still exist.

But what would this same chart look like if we adjusted it for inflation using the government published Consumer Price Index?

In the above example we can see that when adjusted for inflation, the price of silver and gold in the current bull market have yet to hit new highs. This is not even close to the historical president of a bull market increasing in value 500% above its previous high. In our opinion, it would be very unusual for a bull market to end without the inflation adjusted price of that market to at least reach a new high.

The above chart, when adjusted for inflation, as measured by the US government, clearly shows how the price of gold has yet to hit a new high.

This chart illustrates how little the inflation adjusted price of silver has increased in value relative to the previous high set back in 1980. With government stimulus and money printing at an all time high, one would expect the price of silver to be much higher in 2014 than 1980. We would also like to point out that we used the government issued CIP as our measure of inflation and some believe this calculation to be bias to the downside.

We find it very helpful to look at the “Big Picture” and compare historical market presidents when trying to understand if a market is cheap or expensive. When we look at the price of silver and gold, especially when adjusted for inflation, we see a lot of upside potential. Because we believe that the most exciting part of a bull market is at the end of the move, we believe that the best may still be ahead of us. To learn more about our analysis and sign up for our free newsletter, please visit www.investmentscore.com. Our website offers free editorials as well as a paid subscription service for those who are interested.

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  1. Since we all cry that CPI undervalues, wealth preservation in PMs is much worst than indicated than above for the last 30+ years. These are all valid questions. I see many have already popped their champagne on last week’s action. Many assume $800 in the 80s was a glimpse of gold in its natural order Which many debate. Anything above $1500 would reinstate a possible continued bull run. Otherwise we are looking at a very long term outlook. A rough guess on the charts would say 20-50 years but I would accelerate it to 10-15 years (given our scenario) for a true spike unless policy and world events drastically change in PM favor. 
     
    Btw, an extremely big buying opportunity that last decades is called a bear market but we don’t want to say that do we? Just more examples of the deflationary death spiral that we have had. 

    • The music has never stopped in this game of Keynesian musical chairs though.
      If the music stops then the $value becomes meaningless, and only those holding physical are maintaining wealth, everyone else is totally naked.
      There are people who have deposited funds in a retirement plan since the 1980′s that have never touched it and have not realized that in the coming reality it technically was never, ever there … it was an illusion the whole time, thus 100% of their labor value that they believed was accumulated in a wealth preservation vehicle was actually accumulated by another group … those who took the Gold and Silver.
      So what’s the Price of Silver and Gold in a new paradigm … why the PRICE IS RIGHT bobby! :P
      Just keep it away from the Feds though because that will be the next obstacle once TIME has been conquered by reality.

  2. If one takes one’s cues from the paper-metals casino chits, no reliable reading is possible because it’s a staged Dog and Pony Show.

    On the other hand, if one rather looks to the central cause of all the financial and economic corrosion occurring everywhere in the world, as spewing from virtual credit-’money’ and it’s certain rate of exponential implosion, then extremely pleasing prospects for the money metals is perfectly plain.

    • I agree. FRN’s don’t even make a good bum wipe.
      Maybe we should start measuring commodities based on the average price per roll of toilet roll? That would actually be an honest measure of value.
       
      That would make an awesome idea for a spoof Blog.
      TPEconomics.blog.comA NEW MEASURE FOR A NEW PARADIGM’

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