how much time after a peak in prices does a bull run end?

Baley

Curious for your opinions, how many months pass, after a peak in prices, before an advance is accepted to be over (for the time being)?

For example, silver last set a new high in April 2011 at about $49, right?

So that's 20 months ago.

Since then, we've generally seen lower sub-peaks, and generally flat to slightly lower lows

Question is, how long do we have to be patient for a new high and the chance to take some profits?

My rental gives cash flow, my stocks pay dividends, and cash savings pay interest (albeit meager) but my metal just sits there frustrating me, gaining and losing the same few percent (I'm not an active trader, have no time nor inclination to make multiple little trades to skim profits and then account for them to the tax man, so that's off the table)

I read on here to buy more and keep on stackin, but I'm seriously considering reducing metal holdings and putting the money to work elsewhere.

At what point does that segment of the market of owners that the above rings true for, decide to sell a large portion of their PMs and buy growth and/or interest?

guitarwes

Do you want growth of inflated $'s or a long term hedge against them?

I have been in the same boat you are. Questioned my committment to my (meager) stack. Wondered why I hold this metal when it looks so green on the other side. Looked at paper and have no desire to play with it. Then looked at the fundamentals and felt better about holding and adding.

Some say next summer is looking really good for an upward trend in PM's. We'll see I guess.

tneig

Isn't that based on the persons goals in physical PMs? I can think of a different time frame for each one.


- The semi recommended 5-10% for diversification
- Advice initiated
- buy/sell profit making
- The lure of PMs
- What type/value of PMs one holds
- Protection of wealth
- Not fully sure
- Private/dealer
- Stupidity
- Risk tolerance
- What you paid for the blocks you have
- Sort or long term perspectives?
- A sucker or savy?
- Combinations of the above


A general historical and bouncy trend up, with lots of pants crapping along the way.

derryb

I'm with tneig. Goal is ultimate decider. For me, metals are my insurance against dollar destruction and will continue to be so until I see dollars destroying my metal.

For me the bull run is over when I no longer need the insurance that metals have so far provided.

While metals may fall, as long as they are falling at a lower pace than other investment alternatives I will stay with metal. 2008-2009 was a good example of this.

Excellent OP, should generate some interesting discussion.

jmski52

Monetary policy is geared towards herding people into stock market type assets, especially now. Keeping in mind that interest rates are being artificially held down when they should be much higher, it's probably wise to remember that gold (and silver) will always react positively toward low or negative real rates.

If you know what the rate of inflation is, and tend to believe John Williams, then you determine the real rate by comparing inflation to the 10-Year Treasury. The assumption is that the 10-Year Treasury is "risk free". That's not me talking, that's the theory. Anyhow, whenever the real rate of interest is 2% or less, the metals will continue to do well. That's the answer to your question.

I read just this morning that there is a proposal in Congress to change the parameters of the inflation calculations again, in order to reduce the cost of government obligations that are tied to the rate of inflation. (Sorry seniors, pensioners etc.)

The other facet of this inflation & interest rate issue is the debt. The reason, I believe, that they are forcing interest rates to remain low is that once rates creep up, the national debt will explode. They had been rolling over short term notes that previously paid 4% and 5% into short term notes that now pay virtually zero. Problem is, they ran out of 4% & 5% notes that were maturing. That's why they initiated "Twist", in order to convert more of the Short Term debt into 30 year bonds.

When they did that, they drove down 30 year rates with the oversupply and the Fed had to start buying Treasury Bonds because nobody else would.

Even that wasn't enough to supply the government with funding, because now we are seeing $85 Billion per month in "non-sanitized" Treasury Debt being created. This is the same thing as saying that the debt is now being monetized in Real Time. And Bernanke has continued to extend the timeframe for which his zero interest rate policy will be in force. I think that we're out to sometime in 2015 at this moment.

And this morning, just before I started typing this, Obama was standing in front of the Business Roundtable somewhere declaring that he should have authority to extend the debt ceiling with no limits, without Congressional approval.

So, investing is always a matter of choosing the best of several alternatives, and now is really no different except that the paradigm, in my opinion is no longer within the same framework that you or I grew up knowing as "investing" in the capitalistic system of companies and enterprises. We have a different structure now and it continues to mutate.

If you know of a good crony capital firm, or are in an industry that stands to benefit from heavy government involvement, that's another consideration. My sense is that the government wants all of our money. I'd prefer to keep as much of it as I can manage to keep. We report, you decide.

DrBuster

This reminds me of my question a couple weeks ago about converting some of my stack into a trading fund. I'm thinking about it, but I have a tangent in the works now where I'll just keep my stack and alternate some contribs into other arenas instead.

Besides, putting on my pirate hat and playing with the shiny stuff is worth more to me mentally. And I have zero confidence in a long-term dollar value so the core will stay put pretty much, minus any gsr swaps I can take advantage of.

Plus, minus any emergency setbacks/issues, I still have decades to go before I even think about liquidating. Long term trend can only be up, a slow year or 2 is of no concern to me.

Baley

If I bought some silver bars for $40 per ounce two years ago, and they're currently worth $34 per ounce, how is that a hedge against inflation? It sounds like it's more of an investment that is currently underwater.

And if that silver investment is down 8% over that course of time, and another investment is up 8% in the same time period (and there are plenty that did exactly that), is it that the metal investment is not "paper" that makes it better?

Is the metal 16% better? because when I sell one or the other, the cash money spends the same, there's just less of it, currently for the silver.

jmski52

Baley, are you up in your overall silver position?

If you are evaluating silver as an investment, or even as a hedge, I don't know that I would try to analyze it individually on the basis of each and every silver purchase that you've ever made. It all moves up & down together, so the decision doesn't hinge on the pieces, it hinges upon the whole.

The investment decision is: buy? sell? hold?

No more than that. Whether you keep stacking or start divesting, or sell all at once - those are merely strategies.

guitarwes

Diversification. I see you're diversified already, with which you have an understanding. Your example about 1 silver bar losing 8% vs. stock funds gaining 8% is a good one......could have just as well been vice versa then you would be kicking yourself for not selling stocks to buy metal.

There is a sense of "tangible security" that one can't put a price on that also comes along with holding physical PMs. Don't ask me how that calculates into your pm stack losing a few bucks when spot is down. Just think long term I guess (with intelligent buying decisions).

And as derryb said, "For me, metals are my insurance against dollar destruction and will continue to be so until I see dollars destroying my metal."

Informed decisions with everything. If one buys pm's without understanding, they could get in trouble when it comes time to allocate elsewhere.

tneig

It still depends on perception and methodology. If one buys with one methodology, then later at various points on the $spot graph change methodology (and perhaps changes again at different points on the graph), then the predecessor methodology is voided. In an investment viewed methodology, a take out at a lower price could be considered a loss. Also, in an investment methodology, the trend to buy low(er), with a sell in a higher market, is the key. For anyone in an investment mode, PMs are category high risk, and unless very savy and a little lucky, one can lose or gain. eh?



<< <i>If I bought some silver bars for $40 per ounce two years ago, and they're currently worth $34 per ounce, how is that a hedge against inflation? It sounds like it's more of an investment that is currently underwater.

And if that silver investment is down 8% over that course of time, and another investment is up 8% in the same time period (and there are plenty that did exactly that), is it that the metal investment is not "paper" that makes it better?

Is the metal 16% better? because when I sell one or the other, the cash money spends the same, there's just less of it, currently for the silver. >>

roadrunner

It took up to 4-5 yrs (twice) to surpass previous silver highs in the 1968-1978 period. Those consolidations went down for 2-3 years first.

1965-1980 silver chart can be found on chartsrus.com

Justacommeman

I say this once a year.

Gold I own as financial insurance just as I would car, auto or life. So I like when gold is cheaper as it means my premiums are lower.

Silver bullion I own as a speculative devise. I try to sell it into strength and use to proceeds to buy gold. (usually it's just a trade)

Collectible silver and gold bars I count as pure collectables.

MJ

jmski52

I was intrigued a bit, and I believe that your question ought also to consider that the highest close for silver in 2011 was $43.49 on August 22 and that a peak of $49 wasn't really a market price point.

Other than that, I understand that any downward move of 15% or more is considered a correction, but I don't know that any specific time interval is used for that metric. You did ask about the end of a bull run, which is also different than a correction and there is a difference between the two as well.

2011 Charts & Data Darned Kitco, you have to look it up in the historical chart, they don't allow a link.

57loaded

<< <i>I say this once a year.

Gold I own as financial insurance just as I would car, auto or life. So I like when gold is cheaper as it means my premiums are lower.

Silver bullion I own as a speculative devise. I try to sell it into strength and use to proceeds to buy gold. (usually it's just a trade)

Collectible silver and gold bars I count as pure collectables.

MJ >>



But swear I've heard you mention this already.... or maybe it was something else

roadrunner

The metal in your hand is far more than 16% better than paper silver should ETF's default, your commodities or ETF sponsor go belly up, etc. MFGlobal wasn't the first....nor last.
On that day, there will be a huge disconnect between paper and physical silver.

Justacommeman

Because you have As I mentioned in my first sentence, I end up saying this once a year. I would say it more if it didn't begin to sound too preachy

T minus 300+ days until I post it again

MJ

Baley

<< <i>The metal in your hand is far more than 16% better than paper silver should ETF's default, your commodities or ETF sponsor go belly up, etc. MFGlobal wasn't the first....nor last. On that day, there will be a huge disconnect between paper and physical silver. >>



I wasn't comparing physical silver to paper silver, I was comparing physical silver which lost 8% in value, to a stock (for example) or other investment that gained 8% over the same timeframe.

with that in mind, why is it better to have lost money on the physical commodity than to have gained it in a paper one?

Baley

<< <i>I was intrigued a bit, and I believe that your question ought also to consider that the highest close for silver in 2011 was $43.49 on August 22 and that a peak of $49 wasn't really a market price point.

Other than that, I understand that any downward move of 15% or more is considered a correction, but I don't know that any specific time interval is used for that metric. You did ask about the end of a bull run, which is also different than a correction and there is a difference between the two as well.

2011 Charts & Data Darned Kitco, you have to look it up in the historical chart, they don't allow a link. >>



Jmski, I went to the kitco site as my source for the end-of-April 2011 peak in silver prices, and reproduce one salient graph here:

Justacommeman

Silver is up +16% for the year yet some would have you believe it is trailing the general stock market or underperforming. The fact is it has beaten the vast majority of stocks for the year. It has beaten most single commodities and alt investments. Silver had a great year to date.

MJ

DrBuster

Holding some 2011 buys as your base will obviously adjust your mentality, 100%. If that is the basis then I would definitely consider dumping if you're worried and needing an excuse to adjust for things you dont like.

Baley

<< <i>Silver is up +16% for the year yet some would have you believe it is trailing the general stock market or underperforming. The fact is it has beaten the vast majority of stocks for the year. It has beaten most single commodities and alt investments. Silver had a great year to date.

MJ >>



Silver spent the first 11 months of 2012 regaining, losing, regaining, losing and then regaining the same 16% it lost in the one month of December 2011..



... and is now just about exactly where it was one year ago: $33

Justacommeman

I guess you could cherry pick any time frame to prove any point. I've done it in the past myself. Unless you bought ALL of your silver in December 2011 it's rather meaningless in my opinion. If one wanted to show that owning Apple sucked one could easily do that. However, try telling that to those that have owned it for a longer period of time. They would be laughing all the way to bank to this point. Those owning it at $650 or $700 not so much. I like using year to date data has that way you don't end up using it twice. Example, if you took out the month of December in 2011 then silver would have had an increase last year. You can't punish it twice. Silver was down in 2011 and it up in 2012. Over that two year period it is up albeit somewhat marginally.

MJ

derryb

The only price that matters is the price you get. At that time and only at that time is a review of your gain (or loss) relevant. I have never sold physical metal at a loss and I have sold a lot of metal, only to turn it into more metal. This alone tells me the PM bull trend is fully intact.

jmski52

Jmski, I went to the kitco site as my source for the end-of-April 2011 peak in silver prices, and reproduce one salient graph here:

oops, I missed the whole month of April in the chart I looked at.

Still, Baley - the question of allocating resources really shouldn't revolve around a single trade made in that asset class. It should involve the rest of your assets and the function that silver might play within the context of your entire portfolio, shouldn't it?

You've alluded to your asset allocation in the past, and how you may or may not need to change your allocation as the asset valuations have changed. In that paradigm, isn't it considered to be the smart thing if you sell what has appreciated and buy what has depreciated with the proceeds?

I'm confused, are you changing your investing style if you think that the bull run is over? If you aren't, then wouldn't your strategy call for piling in while the price is dropping? Are you doing that?

Don't worry, the bull run's not over. There's no reason to believe that it is.

calleocho

You should sell and get the pool ...

calleocho

Bayle is a fairly sophisticated investor.

I truly doubt that he bought anywhere near the top and he is just teasing silver bulls with the current sideways action and failure to reach new highs in 20 months.

His avatar coin alone is worth more than many silver stacks on this forum.

My guess is he is either bored or just enjoys a lively debate... like an atheist who enjoy chatting up a seven days adventist.

If i am wrong, I am sorry Bayle.

anyways Silver is a heartbreaker ...go wirth gold

Baley

Not so much about my own finances, but just looking at the non-cherry picked facts of this chart of silver prices and the 30- and 200-day moving averages:



and wondering about



<< <i> the PM bull trend is fully intact >>

and

<< <i> Don't worry, the bull run's not over. There's no reason to believe that it is >>



so my question is: What if silver is still sideways-to-lower 12 months from now (say, trading in a range of $26 to 35)? would it still be claimed to be in a bull run? how about in 2 years? 3?

I always thought that bull runs were characterized by higher prices? Where are the higher prices? I'd buy more silver, but am not convinced it can go higher. If it can, why hasn't it?

derryb

It's not just about what silver does. It is also about what the alternatives are doing. When I'm convinced an alternative will outperform metal long term then my metal bull will be over. Until then my long term play is metals. Insurance is not just about tomorrow, it is a long term play until one feels they no longer need it or can no longer afford it.

roadrunner

Silver will be 4X to possibly 5X to 10X higher than current prices in the next 3-7 yrs. Now the question is can you wait for that?
I know I can. There's no other place I could stick something right now and feel comfortable knowing a 4 bagger is on the horizon....especially a paper investment
or even real estate. When they fix the debt problem, get real interest rates positive, and commence the next stock market bull, then it will be time to dump the silver.

pursuitofliberty

Baley,

It's a good question and has generated some interesting responses, and as eluded, may just be a poking stick

However, as for the initial question ... how much time? In many bull runs I went back to some notes and find lags or even dips that held the bull runs I have studied back for 14 to 22 months (sometimes into the 30 month window) before resuming, so the condition you (we all) have seen is not without other examples. If a bubble existed during the end of the run, the lag is proportionately longer depending on the size of the bubble. I (personally) do not consider those times part of the "bull run", but the end of one, and then, possibly, the staging for the next one.

Are we in a bull run now? Frankly I don't think so, but I am bullish long-term on Ag and Au, overall. Going back to my first answer, I think the market for Ag and Au has set a good foundation for another leg up, especially over the last ~6 months, and I think the macro conditions indicate that they will support that thesis. However, the bubble was noticable, in context.

Why do I stack and hold? This question has been looked at in this thread, and it is quite valid, although slightly off topic from your opening question (IMO). However, it is at the core of what you'll want to decide, for you. For me, I believe that there are multiple scenario's where my dollar in Ag and Au will be worth more than my dollar in many other assets, so when I stack and hold, I do so with the "insurance" / "bank account", or "return OF investment" mentality, and not as much for the "return ON investment" mindset. Physical Metals are a slow trade in many cases also, and so in a world of nimble and quick (for many traders), I do NOT look at the stack in that fashion.

For me, at least, metals play a part, and only a part of the overall equation.

As a side note ... my goal three years ago (Oct 2009, my 45th B-day timeframe) was to build a stack worth about 1/2 half of may annual take-home salary. Why that number and then is a different story. During that time I have mostly been a buyer, but have sold some too, and am probably a year or so away (depending) from being at that initial goal (it was a five year goal, so I guess I am on or slightly ahead of target). Overall my stack has not made as much money as a some other investments, but it is modestly in the black. My total net worth is greater, and my feeling of diversification seems more in line with the total macro picture I see.

Baley

I agree that there appears to be a lot of potential energy in the chart, a pattern we've seen many times in various markets



but as far as, "Silver will be 4X to possibly 5X to 10X higher than current prices in the next 3-7 yrs. Now the question is can you wait for that?
I know I can. There's no other place I could stick something right now and feel comfortable knowing a 4 bagger is on the horizon....especially a paper investment
or even real estate. When they fix the debt problem, get real interest rates positive, and commence the next stock market bull, then it will be time to dump the silver"

I guess my problem is that I do NOT "know" the future like you do, roadrunner, for me there are still uncertainties. Sometimes when it seemed "obvious" that a certain trend would continue, it reversed and returned to baseline. If I "knew" the future, I'd be so leveraged with derivatives, soon I might have my own BILL and TRILLS

derryb

<< <i>When they fix the debt problem, get real interest rates positive, and commence the next stock market bull, then it will be time to dump the silver.
I guess my problem is that I do NOT "know" the future like you do, roadrunner, for me there are still uncertainties. Sometimes when it seemed "obvious" that a certain trend would continue, it reversed and returned to baseline. If I "knew" the future, I'd be so leveraged with derivatives, soon I might have my own BILL and TRILLS >>


No crystal ball is needed to have a pretty good idea what's in store for the economy for the next few years. That's enough for most to figure out the future for metals for the next few years. The longer the can is kicked down the road, the longer metals will outperform. As long as the money pumping continues equities will do well; however, I don't expect them to come close to the future performance of metals. And as I have said here many times before, I expect silver to strongly outperform gold.

Baley

<< <i>If I bought some silver bars for $40 per ounce two years ago, and they're currently worth $34 per ounce, how is that a hedge against inflation? It sounds like it's more of an investment that is currently underwater.

And if that silver investment is down 8% over that course of time, and another investment is up 8% in the same time period (and there are plenty that did exactly that), is it that the metal investment is not "paper" that makes it better?

Is the metal 16% better? because when I sell one or the other, the cash money spends the same, there's just less of it, currently for the silver. >>



Now at $26, my inflation hedge is going the wrong direction, shrinking my buying power further.

Decline from peak now almost 50%. How is that not a bear market?