Thought this was a pretty interesting article that I saw on coinflation and wanted to share. http://thedailygold.com/silver-is-following-its-1970s-pattern/
FWIW, this so-called trend neglects to mention how the Hunt Brothers fiasco affected the silver market in the 70's. It appears to be just another instance of someone manipulating historical accounts for their own purposes. Many people believed that the Hunt Brothers acted out of greed, but is that really the reason? I don't know, but if you want to learn another angle to that bit of history, you might like to read this...... http://www.marketoracle.co.uk/Article27513.html Chris
Yeah. I find 1980 too often either overplayed or underplayed depending on what service someone is trying to sell you. Any performance analysis showing 1980 results as an expected outcome is by definition not worth the paper its printed on. Lucky for them they are not wasting good paper here, just 1's and 0's. This is just a case of backfitting. What is the reason they chose the start and end dates in this analysis? Simply because it suited them, no other reason is given. Very common way of misleading someone. Most people aren't critical enough of such analysis. If this paper had been turned into me for a MBA Finance class, I would give it a C+, (which for graduate school is not very good). For everyone reading such papers, (and I do too), the key is always the assumptions the writers make. You have to ALWAYS challenge those assumptions or risk being seriously misled. Why was 1971 chosen as the start date, why was 2008 bottom chosen as a start point? Why wasn't Hunt's short mentioned and shown? Bottom line for this article, they are taking an arbitrary start date and ending at an absolute historical high, (which they do not tell you about), and now starting at an absolute low for the past decade and somehow showing you this "correlation" and leading you to believe the market will go similar to 1980. Way too much manipulation of dates for me to really research their other assumptions much more. Cherry picking dates without explaining WHY the dates are appropriate, and showing the reader the whole dateline so they can judge for themselves if its cherry picking, is probably the #1 way to manipulate an analysis. Too bad, I would have liked to read such an analysis if performed properly and not intentionally misleading.
The Hunt brothers bear the brunt of the responsibility for what happened in 1980, but it could not have happened without help. They were just the most public losers when the CME changed the rules. It was a result of market psychology, insanity, whatever you want to call it, not 2 guys plotting to corner the market in a vacuum although they certainly played a role. Without others assisting the cornering along with herd mentality it never would have happened, so there's no reason to assume it can't happen again, nor is there any reason to assume it will. Since the comparison in the article has not reached a point of correlation with the run up in 1980 that particular aspect irrelevant anyway. The correlation prior to the market insanity is valid so far (within the cherry picked scope definition), and that doesn't mean it will continue to correlate, but it is possible. Just look at what happened with BitCoin. Markets have done and will likely continue to do crazy things on occaison.
I agree markets can be insane. However, the thesis of the article was saying how this was a normal retrenchment, trying to fit two markets together, with the obvious conclusion being this market will reach the same high points as 1980. Its the obvious backfitting of trying to correlate these markets, while in the background showing you its "natural" the market today will spike like 1980, that I object to.
