With the significant decline in the US Monetary Base since 2016 (see here), there are some serious threats facing the monetary system.
These are setting up really favourable conditions for Silver prices and the position it has in the international monetary system. The expectation for much higher Silver prices are certainly reflected in the charts.
I have previously presented this chart (now updated) to show how the current bottoming process (2015 to 2018) is similar to that of 2001 to 2003:
I have marked the two patterns (1 to 5) to show how they are similar. The current bottoming has come to an end, and we have seen a key breakout as expected. This is a chart confirmation that conditions have now turned very favourable to higher Silver prices.
With the breakout confirmed, Silver is now set to continue higher in similar fashion to the 2003 to 2011 bull market. However, this time we will likely see far greater price increases in a shorter period, especially given the serious threats facing the monetary system.
The recent breakdown of the US Dollar Index further highlights the risks facing the monetary system. Below is a chart of the US Dollar Index:
The Dollar Index has broken down from the blue line support, and is likely to drop much lower over the coming months. This support the likelihood of a continuing silver rally over the coming months.
Furthermore, the similarities in the current bottoming of Silver and that of the period from 2001 to 2003 is also reflected in the US Dollar Index chart. Below, is a comparison of Silver and the US Dollar Index chart:
See how the bottoming of Silver lines up with the topping of the US Dollar Index. As the Dollar goes into a deep dive, Silver will continue higher like it did during the first phase of the bull market.
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Warm regards,
Hubert Moolman
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