Long term gold and silver charts revisited

02 March 2013

Let us revisit the long term charts of gold and silver. I contend that since the early stages of the secular bull market, both precious metals clearly exhibited an alternating pattern of 6-9 month upswings followed by 15-18 month consolidation phases.



The only time this pattern was altered was during the Great Panic of 2008-2009 when all asset classes were crushed except safe haven assets like the US Dollar and Sovereign Bonds which rallied to bubble highs.

Gold had an unusually long two year bull phase from the latter half 2009 to the 3rd Quarter of 2011.

Silver behaved slightly different in the Great Recession period of 2008 to 2010. It experienced an extended two-year consolidation phase before suddenly embarking on a vigorous 9 month rally that saw the price almost triple to nearly $50 an ounce.

Apart from the Great Recession period of 2008 to 2010, however, the pattern of spending 6-9 months in bull mode followed by 15-18 months in consolidation mode has been intact.

Will the patten continue to hold, or will the secular bull market finally come grinding to an end? The next few months will be critical.

Given that the secular bull has already lasted a decade, with gold currently trading at more than 6 times its secular low of $250 per ounce (in 2001), the secular bull is already long in the tooth, even if the next phase is up.