There are a whole lotta numbers being tossed around the silver market right now, including:
- 35: The percentage gain in silver prices since the start of 2010.
- 21: The percentage gain in gold over the same period -- meaning the silver "metal" does not stand for second place anymore.
- 30: The number of years one would have to count back to find silver prices at their current level.
- 95: The percentage reading of bulls in silver's Daily Sentiment Index.
- And finally, ONE: The number of directions in which the mainstream experts see silver prices going from this point on. That being: UP
According to Wall Street, silver is locked in a win-win play by its dual appeal as an industrial and investment metal. In other words: If the economy rebounds, the first attribute goes into effect. And should the economy weaken, silver's supposed "disaster" premium kicks in. With the second scenario firmly underway across the financial spectrum, the usual suspects agree that silver's winning streak is a function of its "safe haven" status.
"The specter of deflation and high levels of uncertainty surrounding the economic outlook in the US and Europe is adding to silver's allure," writes a September 27 Wall Street Journal. "Investors are now looking at poor man's gold and scent an opportunity."
We can't help but "scent" something else here -- namely, the familiar whiff of extreme optimism. Think late 2009. Silver prices are within spitting distance of $20 per ounce after having rocketed nearly 60% over the past ten months. And, according to the usual sources, the white metal is set to be red hot. Here, the following news items from the time say plenty:
- "All that glitters is not gold... silver has quietly enjoyed its own bull market." (October 6, 2009 Wall Street Journal)
- "Silver In Mega bull Market That May Rival The 1970s. Silver looks set to challenge its March 2008 highs in the coming months." (November 27, 2009 Daily Reckoning)
- "The primary reason for our bullish outlook on silver is due to the continuing global macroeconomic, currency, and geopolitical risks." (November 28 Associated Press)
Yet -- from its late 2009 peak, the silver market took one gut-wrenching turn down in a 23% sell off.
And in case the verbal similarities between the optimism surrounding silver THEN and NOW aren't obvious, our September 24, 2010 Short Term Update brings the visual likeness into complete focus.
In that publication our analysts present the following close-up of silver prices versus the Daily Sentiment Index since 2009. There, we show the last four times in which bullish sentiment for silver reached the 95% level we see today -- and what happened to prices shortly after.
Whether history is set to repeat itself is not a question of just one piece (sentiment) falling into place. It is a result of all the factors such as wave structure, momentum, and Fibonacci time and price cycles coming together. Get the full story today via a risk-free subscription.