muses of the moment

May 9, 2011

Silver update

Filed under: Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 6:18 pm

So far the quick drop in silver last week is still holding steady within the trading channel set up in February.

If this holds, it is very good news for higher, not lower or plateau, silver price later in the year. So far, we are still in the upward trend which began in Feb. 2011. And, of course, we are well within the long-term trend.

Click here for Jesse’s latest chart that illustrates this much better than I can describe it.

What groovygirl is doing in gold and silver long term

She wants to keep the purchasing power of her savings during the coming global currency collapse.

Yesterday, gg talked about her short-term process for 2011. Click here for the post.

So, what long-term prices is totallygroovygirl expecting for precious metals in the long-term?

Groovygirl follows four precious metals analysts (in order):

Alf Fields

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
Major TWO down from $1015 to $699, say $700 (a decline of 31%);
Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $700 low); this is the one we are in right now;
Major FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

John Williams of

Currently, the real inflation-adjusted price of gold should be around $4,500. This price changes as the real inflation rate changes. It is a moving target, and realistically could reach Alf Fields’ $10,000 target.

Martin Armstrong

$5,000, could be higher.

Jim Sinclair

He has moved his initial prediction of $1,650 made in 2003 to $5,000. He states it could be much higher.

Groovygirl is looking to return to at least the 16:1 ratio for silver to gold. That would put silver at $625 with gold at $10,000. These highs probably will not occur at the same time but within days/months of each other.

Side musing: if all sovereign nations continue to print money to infinity, the gold price could move well past $10,000. It is anyone’s guess.

Now, gg just needs to confirm the timing. Using Martin’s Economic Confidence Model, gg is looking at 2015 to evaluate the gold price. Ultimate highs could be closer to 2018-2020.

She is working to accumulate all her long-term, physical gold and silver positions by 2012-2013. If by 2015, it looks like the final high will be closer to 2020, she may buy more physical gold and silver (if it is actually available at a reasonable premium).

With laws, taxes, and government intervention the way it is currently, gg is looking to have at least 20% of her net worth in physical gold and silver held in several private company vaults. If she were younger, she would hold more, if  older, less, but always at least 10%. If laws or taxes should change, the percentage might change.

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