| ANOTHER SILVER BULL
A subscriber sent me a silver article
from Past Present Futures Newsletter, edited by James
Flanagan (monthly, $269/yr., National Institute of Investment
Research, 1821 Wilshire Blvd., No. 65, Santa Monica, CA 90403. (800)
545-9331). It’s not often I read someone who is more bullish
on silver than I am.
Following the technical method of W.D.
Gann, Mr. Flanagan looks for a big move to make big money, and he’s
landed on silver.
More accurately, he landed on silver
in 1993, and has been watching for its big move since then. "Our
journey into past history and our belief that it repeats has brought
us to one of the most extraordinary crossroads in history. It has
been three generations since we have experienced a decline of the
magnitude we are seeing in the silver market. I believe it is
reasonable to suggest that this final low in silver will be
equivalent to the precious metals what the 1932 low was to the stock
market.
His argument involves cycles in the
silver market running back to 1861 [sic]. Eight out of 12
lows were made in the first or second year in the decade. Silver,
42% off its 1998 high, will soon make its thirteenth major low in
1861. Comparing the duration of the cycles, he expects a bottom
higher than the 1991 and 1993 $3.50 lows.
Even more interesting to me is Mr.
Flanagan’s conclusion that the gold/silver ratio is headed much,
much lower (silver will gain value against gold). His target is long
term support at 18:1 [sic]. Presently, the ratio still stands
around 60:1, having dropped from 100:1 in 1991. If that target were
reached, rough numbers show that swapping one ounce gold for silver
right now would bring you 3-1/3 ounces of gold at the bottom.
Mr. Flanagan also expects a shift away
from equities and into commodities, viewing their performance as
"flip sides of the same equation." During this expected commodity
bull market, he expects silver to be one of the "glamour"
commodities.
This short review, of course, can’t do
justice to his careful historical analysis, but I do find it
comforting that someone using a completely different method than I
use comes to the same conclusion about silver, and about silver
versus gold.
In addition to the gold for silver
swaps I recommended last month, you ought to consider buying the
farthest-out silver calls you can buy. For that you’ll need to call
our recommended options broker, Sue Rutsen, at Fox Investments in
Chicago, (800) 621-0265.
-- F. Sanders
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