At the end of January, silver experienced its own Black Monday…
The metal dropped 26% on January 30, its worst day in history… worse than the S&P 500 Index’s infamous one-day collapse of 20.5% in 1987.
That was a seminal moment in market history. Some remember going through it themselves. But folks always seem to forget that the Black Monday crash happened in the midst of a powerful bull market.
The S&P 500 finished 1987 with a positive return. And the bull market didn’t end, either… Within four years, stocks had doubled from their Black Monday low.
In other words, a collapse in prices doesn’t guarantee that a boom is over. It’s often simply a market-clearing event – a reset before the next phase of a boom.
That’s true for silver right now…
A Mid-Boom Crash Is the Rule, Not the Exception
Most investors weren’t ready for silver’s recent sell-off. But if you study history, it becomes less crazy.
We can see it by looking at the last great metals boom in the 2000s. During that decade-long rally, silver crashed several times… only to storm back to higher highs.
The chart below shows the silver rally between 2001 and 2011. The metal crashed multiple times along the way… but ultimately soared roughly 1,100% from trough to peak. Take a look…
By April 2004, silver had more than doubled from its 2001 low. Then, it suddenly crashed 33%.
It took nearly two years for silver to break out to a new high. By May 2006, it had nearly doubled again before hitting another peak. Then, it crashed 35%.
Again, it didn’t hit a new high for nearly two years. But in early 2008, silver was up roughly fivefold compared with its 2001 low.
This had been a long and powerful bull market. So for many folks, what happened next probably seemed like the end…
In 2008, silver collapsed 57% from peak to trough. At the same time, America was in the middle of the great financial crisis. The stock market had collapsed by more than 50%.
It wasn’t an easy time to be an investor. Plenty of folks thought the world was ending. But even that didn’t end the silver bull market.
Instead, silver soared more than 400% from its 2008 low through its 2011 peak.
Now, today’s metals bull market likely won’t end with such a dramatic rally. But the crash we just saw isn’t unexpected during a silver boom… In fact, it’s normal.
Importantly, silver has stabilized in recent weeks. The metal is up 20% since its bottom on February 5.
That means the uptrend is still in place.
And no matter what you think after this major shake-up, the silver bull market isn’t over yet.
Good investing,
Brett Eversole
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Source: Daily Wealth
