Silver Was Not In a Bubble in 2011!

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Gary Christenson - Deviant Investor

Conclusions

  • The April 2011 silver price spike was NOT a bubble.
  • The January 1980 silver price blow-off was a bubble, and it was materially different from the April 2011 price spike.
  • I fully expect a bubble in silver – someday – but that day is months or years into the future.
  • Prices for food, energy, silver, and gold are going up – broadly speaking – along with the national debt, money supply, and similar measures of debt and credit. Since we KNOW national debt will increase for the foreseeable future, plan on the prices for food, energy, silver, and gold increasing similarly.

The Data

  • I examined the weekly data for silver since 1974.
  • I used 144 week, 100 week, and 40 week moving averages for smoothing.
  • I calculated the difference, both absolute and as a percentage, of the weekly closing price of silver above and below the various moving averages.
  • Excel calculated the standard deviation of the percentage price differences in the various data sets – over 2000 data points for each of the three moving average groups.
  • I examined the exceptions – the extremes in the data sets.

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