Silver's Stunning 2004 Parallel: Is the Bottom In?

Summary

Silver's recent price action is drawing comparisons to its movement in 2004, marking an intermediate-term correction within a secular bull market. While historical comparisons can vary, 2004 shows striking similarities to today's market, particularly in terms of parabolic moves followed by significant pullbacks that ultimately proved to be price lows. Evidence suggests that we may have entered a new secular bull market for gold and silver in 2023. Analyzing gold's correction analog, historical precedents from 1973 and 2006 suggest that the current correction in gold, while appearing bearish, could precede substantial gains, potentially doubling or increasing by 85% over the next few years. Silver has recently shown strength by outperforming gold and rallying to significant resistance levels, though it may still test support around $70 or consolidate sideways for a few months. Crucially, silver's open interest has plunged to a 15-year low, indicating a lack of sellers and further supporting the idea that the bottom is in. Looking macroeconomically, the gold to NASDAQ 100 ratio, currently in a nine-year base, suggests a potential shift of capital from tech into precious metals, which could fuel a significant upward move for gold, potentially reaching $7,000 to $9,000 in the next two to three years. While miners have shown some positive movement, resistance levels need to be broken for sustained upward momentum.