It's been a very tough year for cryptos and precious metals as well as geopolitics while oil and the U.S. dollar boomed. The oil industry, which was hit hard by low oil prices in the last few years, reaped sudden profits this year as oil went back over $100 per barrel. At time of writing, oil is just under $78. The average price in 2019 was $57. It's nice to see the industry recover as it employs hundreds of thousands with high paying jobs and allows them more funds to explore for new oil fields.
The U.S. dollar index meanwhile went from around 94.8 in January to over 144 at the end of September, a high not seen since the dotcom bubble era of the early 2000s. While the dollar has receded, at present, hovers just below the 104 mark, a good nine points higher than at the beginning of the year.
Cryptos in general have taken a huge hit since their highs of a year ago. The FTX /Alameda Research scandal and the domino effect of bankruptcies that have followed, coupled with distrust of exchanges as a result certainly isn't helping. Once the mess is finally behind us, I do expect cryptos to rise in value once again as its adoption continues to expand. In my own opinion, cryptos are just getting started while at the same time, people are getting smarter as a result of everything that's happening. This should lead to a much more 'informed' adoption of cryptocurrency usage.
Everyone and their next door neighbor was jumping into cryptos not really knowing what they were doing and hoping for quick profits. A good example is a million customers at the FTX exchange who are now screwed and will likely lose everything. Thankfully though, SBF still managed to find $250 Million to post bail last week. Something like this might never happen again because of the aforementioned informed adoption of cryptos.
Cheat on us once, shame on you. Cheat on us twice, shame on us!
Getting back to precious metals... silver was on a roll back in January, crossing the $24 mark after a dismal 2021. For the rest of the winter, silver did well, surpassing $26 in March but in April, began a steady decline into the summer, dropping below $18 in August and early September.
Compare the chart above with the one below for this month which is still ongoing. Silver has regained about $5 since September and really started picking up pace after FTX...
While it's been a roller coaster ride for silver, gaining and losing throughout the year, it has managed to hold near the $24 mark at the beginning of the year to the end. I don't think I've seen that before and I've been following silver a long, long time. Should this be seen as a positive? I guess only time will tell.
Gold has a similar story. Here's the chart from January when the spot price surpassed $1,840...
Now here's the chart for this month showing that gold continues to hug the $1,800 mark...
Like silver, gold was a fantastic performer from January through March, hitting the $1900s in February and climbing further to about $2040 in March. By August, gold fell to the $1,700 range and falling even further to below $1,640 on September 27. Gold struggled to regain momentum through the month of October and hit a low of $1,620 on November 3, just before FTX. It's been climbing ever since to regain its summer losses.
There was money to be made and there was money to be lost is the best way to describe precious metals in 2022. Looking at the bigger picture, an incredible pattern emerges, the classic 'cup and handle'. The 'Cup With Handle' is seen as a continuation of a bullish pattern marking a consolidation period followed by a breakout.
I had a look to see if silver has a similar bullish long term pattern. While not as pronounced as the gold pattern, it's still there.
This can be explained that while gold has surpassed its 1980 high a few times now, silver has failed to do the same for its own 1980 high, not even once. Was there manipulation on the price of silver? The answer is yes and people are starting to go to jail for such criminal activity. Could silver's less pronounced cup and handle mean it's sitting on a springboard of pent up energy just waiting for something to release it?
If Oil is suddenly starts trading in exchange for gold as payment as Credit Suisse's Zoltan Zohar posits, then gold may double in price literally overnight and where gold goes, so does silver. The point here is that silver hasn't yet breached its 1980 high while gold has not only surpassed its 1980 high but has done so by an increase of more than 150%! This would suggest that silver would have hit or surpassed $75 at least once by now yet it hasn't come close. If gold doubles in value as Zohar suggests might happen, then we should expect silver to immediately jump to at least $150 per ounce from what it is today, which is around $24.
An article at SD Bullion explains the true ratio of silver to gold. The price ratio is so out of whack at 76:1, it takes 76 ounces of silver to buy one ounce of gold. SD Bullion explains that the true physical ratio, the actual amount of silver available compared to gold is closer to 8:1.
This is huge!!! If true market value is allowed to take place, it would imply a silver price of $450 when adding Zohar's scenario with the true physical ratio of gold and silver.
Now, I'm the first to admit I'm no genius and I'm not an investing expert but DAMN! Can you see how silver could outperform gold? I have no crystal ball to look into but these charts do hint at something big on the horizon for precious metals. While 2022 has seen gold and silver go topsy turvy in the summer months, in the end they managed to fend off any losses for the year.
Well done, Gold and Silver!
Peace and Love to everyone.
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