Where the long term silver cycles are now

Sun, Sep 21, 2014 - 5:47pm

I described certain significant political cyclic effects in precious metals prices in previous blog essays.

(If you missed them: Gold & 2nd Term US Presidents ; War Cycles and The Price of Gold ; An In-Depth look at a Major Cycle in Spot Silver ; Silver Market Cycles )

In particular for those contributions I focused on the 2 year cycle which corresponds to congressional electoral process. I also looked at and emphasized the 4 year cycle which corresponds to US Presidential elections. A third period that I looked at carefully is the seven to eight year cycle which corresponds to the cycle of duration of reelected US presidents. This cycle, in it's eight year version may correspond to a model used by Martin Armstrong which he classifies at 8.6 years and considers to govern or to track general economic confidence.

Among large cycles which I have not covered in this series of articles is a seasonal effect in pretty much all financial markets, and that could be described alternatively as a 1 year cycle, if one wished to do so, and that would be an accurate characterization of the seasonal effect.

Another cycle which I like to keep track of is a central bankers' cycle which tends to come in at approximately five years length. Precious metals traders will be able to come up with some of the banking organizations five year deals, agreements, or plans. It is also common for sovereign states to operate economic plans and targets with this timespan, and large corporations are candidates too.

I thought I might show a picture of this 5 year cycle today, and also put several cycles together to see how they all interact with each other during Q4 2014.

So let's take the five year swing to see what it does:

Now in order to be straight up about this, the existence of a five year cycle is a debatable point, and statistically it has a weak score. So this is an alleged cycle, or a possible cycle in the price of silver. You take a look, do your own examination of the facts, make up your own mind. I merely provide an illustrated interesting direction in which you might focus your gaze for a while to see whatever you can see.

Of course there a a lot of possible cycles in silver, so a question that regularly comes up is what are the others saying?

Here is a chart showing a collection of cycles in silver. It's not the top scores, nor the best documented by researchers. This is just my subjective choice of some cycles that I consider pretty active around now, so it's my selection chosen for relevance today:

Interesting, right?

I should say that there is a middle low in the above chart which other techniques suggest will be the "main" low. Whereas this chart places the weakest spot at December. And if it slots into the notch located at end of September we are already almost there! But the general thrust might be that Q4 2014 is a time of great possibilities for buyers of silver.

So since this is a scan of the longer term swings, what about the 8.6 year cycle? Well if you take 8.6 years it looks like this:

As you can see, if it's running at that length it exerts a depressing effect on silver down until Q2 next year.

However if this cycle is running in accordance with a dual term US presidency we can look more to a gap of 8 years since the last low. Actually there are reasons to assume that a second term president gets into the saddle faster, and that cycle might be closer to 7 and a half years. My preference is 7.8. I think Tom McClellan of McClellan Oscillator has written on this and it might be mentioned on his website but I can't confirm it, but I know that he and Sherman McClellan have worked on it.

So here are the two scenarios for this swing. First I'll show it at 8 years exactly and you can judge the fit if any for yourself:

That looks quite interesting, doesn't it?

Now if it is running shorter it would match the silver price action more like this:

That doesn't look so good if you are substantially long silver. But's it's the best fit if the cycle is running that period currently.

So the interesting question is: do we have an 8 year cycle plus a 5 year cycle producing their footprint, or it it all just a 7.8 year cycle? I have given the likely fundamental underlying cause for these swings, if they are dominating other economic effects, so everyone can decide for his or herself.

Also the volatility recently seen in the precious metals prices should be compared to the same period of time at the same stage of previous waves as this can sometimes make it easier to decide which one we are in and where we are in it.

By the way, the above charts are produced using logs of price which makes the vertical axis a percentage or ratio scale, so if it looks different from your chart that is the reason why.


Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author


Sep 21, 2014 - 5:56pm

nice one !

#1 numero uno

Sep 21, 2014 - 6:00pm

Useful information, particularly at this juncture. Oh, 2nd.

Things'll pick up soon, no need to worry.

Sep 21, 2014 - 6:10pm

So we still have another

So we still have another 30%to40% to go before the silver rocket takes off? What a waste of an article when bankers control price....for now. China to start soon.

Sep 21, 2014 - 6:13pm

What happened to your wave

What happened to your wave before 2005? Why no wave? Are you trying to start a wave graph of hope.

Sep 21, 2014 - 6:26pm

I'm not sure what you mean

I'm not sure what you mean "before 2005". Would you prefer I show several past waves of each cycle. If I do that the detail for the present year would become quite compressed and harder to see clearly.

Of the longer wave two out of three possibilities show the low as being passed already or imminent. Only one out of the three 8 year alternatives shown the low still to come with more implied downside.

My preference is for the 5 + either 8 or 8.6. And that doesn't particularly scare me. But it would be wrong to omit showing the third possibility, which is 7.8, and that particular one of course has more bearish implications than the other two scenarios. It's a possibility just like the others are. I can't make it unfold the way I want it to.

Sep 21, 2014 - 6:31pm


ok, but how does it look prior to 2005?

9 years isn't much to draw a pattern-conclusion.

edit: ok, just seen silver2013 has raised this too.

Sep 21, 2014 - 6:34pm

I used data going back to

I used data going back to February 1970. So for the longer waves consider 5-6 past waves. It would be better with more back data.

I normally prefer to use 10-15 waves for minimum, hence the careful way I have described the cycles as alleged, lower reliability/fit score than preferred and so on.

Long historic data, eg 100 years data, for silver is difficult to come by.

Sep 21, 2014 - 6:36pm

If you plot these waves back

If you plot these waves back to the 1970s, most of them are running inverted.

Sep 21, 2014 - 6:40pm

The Only Cycle I Try To Follow

Is when I buy every week or every other week. LMAO

Nice write up AM but your away ahead of this dumb clut when it comes to cycles so I just Keep Stacking.

Sep 21, 2014 - 6:42pm

8.6 Year in silver over

8.6 Year in silver over nearly 45 years

Sep 21, 2014 - 6:46pm

So I guess...

...the "federal" reserve was right there next to God Almighty during the creation.

They are part of the Trinity or should I say quadrinity.

They speak and all is accomplished.

They create "ex nihilo" like the creator..."money for nothing and their chicks for free"

Nothing could ever go wrong........

"whistling past the graveyard"..............................

Sep 21, 2014 - 6:57pm

ps argetus

I'm with you on the wave stuff. The sine wave is the fundamental pattern behind everything that exists.

Trying to suppress and control it, as is the aim of those who hold power, is the root of their undoing. Hence fear, the fear of losing control, governs all their actions.

It's just a matter of time before the natural returns to the normal.

Twill be messy as it snaps back.

Sep 21, 2014 - 7:05pm

So if I'm trying to manage my...

....expectations, I should be getting excited closer to 2017 and forward...?.....but what about this Massive OI we keep hearing about...I'm curious how The Big T feels about things when you compare this excellent Argentus piece vs the massive current OI....

Sep 21, 2014 - 7:07pm

What's a mother to do?

I would like to throw out a number of questions to discussion that may help with the current outlook for silver. Over at financialsense.com Jim P speculated that the fed is preparing the markets for interest rate hike, he says rising rates will drive people to sell bonds as interest will not sustain principle loss. Can the US gov sustain rising real rates? When silver price is squeezed lower when will mining economics influence supply? Remember base metal and gold are moving lower also so by-product silver should be steady to lower. Will the negative sentiment in silver force the little guy capitulation as all the weak hands are under water for 4 plus years? Is this part of the game plan? When will the brics move out of $US finally show stress in dollar? Anyway if anyone wants to add please do.

Sep 21, 2014 - 7:27pm

@ argentus I like the

@ argentus I like the extended graph better. Good find. How do you see th massive OI playing out within the graph in december or next year?

Sep 21, 2014 - 7:33pm

open interest for silver

I heard a good possible answer to why the large sustained OI for silver from Alasdair Macleod on silver doctor's market wrap. Worth the listen.

Sep 21, 2014 - 7:40pm

More consequences

OK about that strong dollar what consequences does it have to our debt and funding needs?I heard Jim P over financial sense say that new factories are being built by the international corps here. What does that strong dollar do to that equation? Gold may be dead for awhile due to all that exists for potential supply but what about silver? Will that gold/silver ratio reverse as the economy picks up and silver's industrial component kicks it?

Sep 21, 2014 - 7:44pm

The big open interest I tend

The big open interest I tend to regard in the same way as volume-at-price. I need to know what price it was put on to surmise where the support or resistance coming from it will operate. So I usually just use VAP. I'll post a couple of VAP charts in the setup thread next week.

A simple view is that when price approaches a long term trendline OI increases, and OI decreases as price moves towards middle-of-range levels. So trendline analysis, while it may seem a little basic, encompasses most of these other things to a good extent within it.

Sep 21, 2014 - 7:52pm

Test scores (out of 100): 2

Test scores (out of 100):

2 yr 81

4yr 90

4.96 76

6.4 92

7.8 77

8.2 87

8.6 92

This is a reliability-fit score using Bartels equation.

Sep 21, 2014 - 9:07pm
Sep 21, 2014 - 9:24pm

no doubt

thats cycle stuff

Sep 21, 2014 - 9:34pm


Did I just miss my opportunity?

Sep 21, 2014 - 9:40pm

King of the one liners

You OK there Mad5Hatter, aka SilverSurfer Dude? Cat got your tongue or suffering from fractured typing fingers?

Joe Dokes erewenguy
Sep 21, 2014 - 9:41pm

Nope, it's an even better

Nope, it's an even better opportunity.

Opportunities abound these days..


erewenguy Joe Dokes
Sep 21, 2014 - 9:42pm

The opportunities are

The opportunities are endless!

Sep 21, 2014 - 9:44pm

It has nothing to do with logic.

Analysis of paralysis! Throw out your human mind, emotion, and sense. This is uncommon sense. Once you've stepped back and know that the EEE doesn't want one citizen peep having access to one ounce of real money. That means you and anything and everything will be used to have you squeezed out of your physical metals. Other than the bankstering gangsters coming directly to your home and shaking you down, after kicking in your door to obtain the contraband, under warrantless circumstances, the fiendish masters of the universe, who would rule all the world, will not be and should not be getting your real money gold and silver. You get squeezed or margined out of paper positions then too bad I'm so sad but we who have been this way before know how far the paper price can plummet. Just like any other paper asset, including dollars the intrinsic value is zero. Never will happen with physical gold and silver real money in hand. Why play the sick games of the wall street gangster who have been shaking down people for all their worth for over a century. Keep stacking physical real money with discretionary income while the frns still have value. It won't be long and you'll see the self evident truth of why you hold physical real money in gold and silver bullion. If you don't know why you're stacking bullion and have been stacking, even the self evident truth will likely do a fly by. Heaven forbid anyone on this thread, after all has been said and done by the criminal eee, these passed many years, to have you throw your real money to the bankstering thieves at any price below 500 an ounce in silver and 5k an ounce gold is beyond anything I could convince you of in writing, podcasting, or financial psychoanalysis. It's a personal commitment the likes you cannot imagine to sit tight when nothing goes right in the human mind with your money choice. Relax! You can always enter the race after the real value of gold and silver are discovered post haste. Yes! Enter the race then, the human race but for now step out of your body and keep your wits and your real money.

Sep 21, 2014 - 9:47pm

Pagan Holidays - Autumn Equinox, Mabon, September 21

Those DAMN pagan BIS metals traders at it again. Thanks for the sale, I guess.

Mr. Fix
Sep 21, 2014 - 9:53pm


There is nothing cyclical about this, these markets are broken!

Sep 21, 2014 - 9:58pm

Tomorrow morning

My planned trip to the LCS in the morning will be even more interesting now. I'm expecting a lineup at the door before they open and I'm know for sure a lot of these people have much deeper pockets than mine. Suspecting that by the time I get to the counter the good (cheap) stuff will be gone.

Spartacus Rex
Sep 21, 2014 - 10:00pm

Liberty, Apparently "The Road Not Taken" By Most

"TWO roads diverged in a yellow wood,

And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference."

Robert Frost (1874–1963). Mountain Interval. 1920

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