Started by forex4you, Dec 11, 2022, 07:35 am
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Two years ago, I made a video on my YouTube channel, explaining why Silver OANDA:XAGUSD is forming a strong bullish reversal pattern.
Currently, we’re past Wave 1 and almost at the end of Wave 2 in the new bullish cycle.
Now, apparently, there’s a belief that silver isn’t a store of value anymore; that cryptocurrencies have already replaced gold and silver for that matter; that silver is a consumption commodity like copper and lithium, so if we need more silver to make more electronic products, we can just recycle what we’ve already mined; that the major retail consumer of silver is someone who goes cheap on platinum or gold jewellery; the list goes on…
In the video I linked above, I explained why I think silver is about to have a bull run, along with a general hands-on walk-through of my trading/investment analysis.
The only development on top of what I said in the video is the rising demand for silver in the production of photovoltaics, which has more than doubled since 2012 in the quest to ditch fossil fuels. The total demand for silver in 2022 is at an all-time-high since 2012, at 1,101.8 million ounces, 71.5 million ounces short of the total supply.
Now, for posterity, I placed a long order with Stop Loss at around $11 and profit target around $65. This is 2.618 of Wave 1, which is quite conservative, given that this bull cycle is not just fuelled by the hyper-inflation of the denominator (i.e., USD), but also the expected surge in demand for silver for industrial applications in the coming years.
The aforementioned denominator is an interesting case. Across markets, the discussion revolves around the crash of Bitcoin , the crash of stocks, the crash of gold and silver , and so on. The question that should be asked is what are all these assets crashing against: a hyper-inflated, artificially maintained denominator, whose artificial maintenance has been successfully carried out so far, but I don’t think is sustainable in the long run.
When it is no longer feasible for the custodian of the denominator to artificially maintain the price of the asset, when other assets are allowed to be valued against the real value of the USD, the astronomical inflation in the price of commodities and BitCoin would be proportional to the astronomical inflation of the USD in the last decade.
Speaking of artificiality, TVC:DXY is a prime example. I see many investors look at the TVC:DXY and claim that the Dixie has always been strong, that it’s the strength of the USD that keeps gold and silver prices down. Well, TVC:DXY is the relative strength of a hyper-inflationary asset against a basket of other hyper-inflationary assets (EUR, GBP, CAD, etc.). A strong dollar doesn’t mean a strong dollar against assets with limited or capped supply (as in BitCoin ). All it means is that the hyper-inflationary asset in question isn’t as hyper-inflationary as its lavish siblings.
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