According to some analysts, silver has just logged one of its longest periods of daily winning streaks (I think it was something like 14). Of course, in terms of price we are far from breaking any prior winning streaks since this most recent string of gains only took silver up about 11 or 12 percent in price. (In 1980, silver moved 50% up and down in a matter of days.) I would rather that speculators or investors understand that silver is an erratic metal– one that crushes the bulls and the bears with relentless moves– than have them attach too much importance to records like what we have seen recently. Many are often unable to stay on these moves in silver because they can’t believe how overbought (or oversold) the market has become.
However, when we look back at silver’s last bull market, from 1963 to 1980, there were several 18-36 month periods where at least on a monthly basis, the silver price hardly retreated more than 4 or 5%– and often spent anywhere from 8 to 13 months going straight up (again on a monthly basis.) These two winning streaks were 1971-72 and in 1978 just before silver made its blowoff top. There is nothing stopping an overbought market from staying overbought for quite a while. This is one problem some technicians have regarding their art form.
Of course, what goes up will eventually come down, and one should always respect the need for risk management in a portfolio. But then again, how many equity only investors have yet to consider (or reconsider) the precious metals as a risk management tool? If they ever did, I think the 1979-1980 top might look tame in comparison.