The Morgan Report Blog

General Access, Investment Scoring and Timing Newsletter

General Access, Investment Scoring and Timing Newsletter
Buy Silver Now? II
July 26, 2013

Are you invested in or looking to buy into the silver market? Back in April we wrote an article illustrating the seasonal trends for the price of silver. At that time we determined that it may make sense to wait for a more favorable time of year to buy new positions. Based on silver performance in past years, would it have made sense to buy in July / August, or would it have made sense to wait for a better buying opportunity? Let’s take a look at some purchases in the bull market at the start of each August to see what would happen to that investment by spring.

In 2004 we can see that if we had purchased silver in August we would have had a little bit of buying opportunities in the coming months but not much. Silver more or less trades sideways to slightly up that year but July / August was a reasonable time of year to add to positions. So how about the other years?


In 2005 we can see that July / August was a fantastic time to add to new positions. A strong uptrend followed the typically slow summer months.

In 2006 a slightly better buying opportunity presented itself in September / October which can typically be another weak time of year for the price of silver. However, July / August proved to be a reasonably good time to add to positions in 2006.

In 2007 the price of silver trended much higher from summer to spring with the exception of a slightly better buying opportunity around September. Again, buying in July / August turned out to be a lower risk buying opportunity.

Clearly buying silver in July / August of 2008 was not a good idea. It made a lot more sense to wait to purchase the metal at a considerably lower price in October.

Now buying new silver positions in July / August of 2009 & 2010 was a fantastic time to buy silver. In fact, waiting to buy new positions in October could have resulted in missing this impressive uptrend.

In the strong downtrend of 2011, following the strong advance in 2010, August 2011 proved not to be a great time for buying silver.

From a short term perspective it would have been a very bad idea to buy silver in October of 2012.

The following is the simplest way we can summarize our thoughts on the above charts. When it comes to seasonal trends for the price of silver in the current bull market the following applies:

  1. Summer is a great time to add to position as it is often at or near the low for the year.
  2. When taking new positions in summer one must realize that even lower prices often present themselves in fall.
  3. After a strong year with a large increase in the price of silver it is possible that prices do not shoot higher and can actually fall further heading into spring.
  4. It is important to consider the market from many perspectives prior to buying but seasonal trends are a very helpful tool to consider.

What is interesting from the above analysis is just how well an investor could have done from 2004 to 2012 just from buying at the start of August and selling at the end of April. This is a rather simplistic trading strategy that could have made an investor, excluding fees and taxes, approximately a 31% compounded rate of return.

At we use our proprietary technical indicators and consider seasonal trends to give us an idea of when to scale in and scale out of new positions. If you would like to learn about our strategy and sign up for our free or paid newsletter please visit

How a Streamer can ‘shave away’ Investment Risk

David Smith on radio.

Best Gold Opportunity?

Express gratitude before anything good happens

Best Gold Opportunity?

Express gratitude before anything good happens

Production Slowdowns in Mining Gold & Silver (David Morgan)

In this interview with Ellis Martin, David Morgan of discusses the temporary suspension of operations of a silver producer based on the cost of production being at par or higher with the price of silver per ounce. With many producers geared up for $30 an ounce silver, $19 remains a challenge for some. However, companies with lower production costs and near producers running a tight budget are seeing light….even as majors like Barrick Gold are pulling back. Ellis Martin also criticizes the pundits, who incorrectly sold a bull market for gold at a wishful $2500 an ounce in 2012.

Disturbing Market Manipulations & Supply Destruction in Gold:Silver

A Must-Hear Interview with Silver Market Insider David Morgan — Exclusive to ILB!

Silver is Holding Up Much Better than Gold During the Freezing of the Chinese Credit Markets

It has been well-broadcast over the past few months that China is draining liquidity out of its shadow-banking system. It began this process by ending the Chinese Copper Financing Deals CCFD on May 5. Up until May 5, Chinese investors could take advantage of the interest rate differentials by using copper as collateral. So, they imported tons of copper used it as collateral for letters of credit and rehypothecated that copper 10x in the first six months. Incredible leverage was obtained from this copper carry trade. With the end ofthe CCFD, Goldman noted the positive carry trade would become a negative carry. Goldman guesstimated the closing of the CCFD window would result in an unwind of these carry trades over a three month time window (though they said there was no certainty on this guess).

It may be that the closing of the CCFD window was a precipating factor to the freezing of the Chinese credit markets last Thursday. The freezing of those credit markets is creating much worse spasms for gold over the last 2 days than for silver. This should not surprise because the Chinese favor gold over silver, and if there was speculative froth over there, it would be worse for gold than silver. Nevertheless, it has been bad for both markets.

However, silver has steadied itself over the past three sessions after setting a low at 18.38 on Wednesday after declining almost 27% in 45 days from April 26 to June 28. This 45 day decline is almost perfectly symmetrical to the 44 day decline from Oct 28 11 to Dec 29 11. Even the time of month is similar. In addition, the decline into 1817 this morning is a 2.0 external retracement of the Dec 2011 to Feb 2012 range.

Notably, silver has begun to outperform gold as of Wednesday this week. This is a first for silver since February of this year. Silver tends to outperform gold when these two markets are moving higher. This is another preliminary indication that we are close to finding a bottom to this bear market in precious metals.

Click picture to see bigger.

Source: CQG, Inc. ©2012 All rights reserved worldwide.

John Bougearel CMT
Structural Logic CTA
Event-Driven Research for Risk Managers

John is a Chartered Market Technician CMT and member of the Market Technician’s Association. John is principal of Structural Logic Inc, a Commodity Trading Advisor CTA. Structural Logic incorporated in August 2000 as a financial newsletter and later became a CTA, offering managed futures accounts to clients in 2012.

This post contains confidential information and is intended only for the individual named. Please notify the sender immediately if you have received this e-mail by mistake. Structural Logic’s Newsletter is for informational and educational purposes only and should not be considered investment advice. The risk of loss in investing and trading financial securities and commodities can be substantial. Certain data and/or information presented have been provided by sources believed to be reliable. However Structural Logic Inc. makes no warranty, either expressed or implied as to its contents, accuracy or performance. Structural Logic shall not be responsible for any loss as a result of use or misuse of information provided.

Long or Short Stocks is the Question: I’ve Got the Answer!

Stocks managed their third session higher as of Thursday June 27th and its too late to jump onto that move. Major indexes and leading stocks have rebounded into resistance along with a few key moving averages. The next 1-3 days favor a pause or pullback at the least simply because of the selling momentum and multiple resistance levels being tested. It is only natural for traders and investors to pull some money off the table or short at these levels.

Stepping back seven days and looking at the overall stock market we have seen a substantial drop in prices across the board. A Ton of stocks have formed their first impulse thrust to the downside which is typically what happens when a stock market is in a topping process (Stage 3 Distribution). The type of damage we had cannot be fixed overnight. This will be a process if it is to resolve to the upside and price action will remain wild (volatile).

The odds from a technical analysis stand point using Price, Momentum, Cycles, Volume and Moving Averages point to lower prices still to come. Actually they point to another 5% drop from the current level.

Major Points to Be Aware Of:

1. 20 Simple Moving Average is crossing below the 50SMA. Last time this took place it triggered a 5% drop in the SP500.
2. Price has bounced for three consecutive days. This typically puts the odds in favor for a pullback.
3. Price bounced and hit it’s head on the 20 and 50 moving averages on Thursday (RESISTANCE).
4. Market Time Cycles are in a decline phase meaning there will be a negative bias and seller will be actively pulling price lower on bounces.
5. Major Long Term Chart looks favorable for a bear market to start which may last 12 months. If so this is just the beginning of some scary yet highly profitable potential trades in the coming year. Stocks fall 3-7 times faster than they rise…

Daily SP500 Trend & Analysis Chart:


Long Term SP500 Trend Chart:


BEARISH SP500 Price & Volume – 60 Minute Intraday Chart:


Looking at these charts from a long term, intermediate and short term basis the odds are favoring lower prices. Being short stocks or buying inverse ETF’s is the current play for the market. But analysis and trends are subject to change depending on price and volume action each week. Do not get your heart set on the BIG picture outlook of a yearlong selloff. That could prove to be dangerous. We take this market one bar or candlestick at a time and trade based on current short term analysis.

Get My Trade Alerts & Pre-Market Video Analysis Every Day:

Chris Vermeulen

The Morgan Report Blog