Almost a Breakout

Take a close look at the following two charts. Do you see the key difference?

Gold is starting to break out of its 'pennant' pattern, but silver is lagging. Until both metals break out of their respective pennant, their price consolidations, which have been in place since both metals reached multi-decade highs in May, will continue.

The above charts present a paradox of sorts. The silver chart is overall more powerful, and one would therefore assume that silver was more likely to lead. In fact, that is how I concluded my last alert: "An upside break-out by silver, and then gold, looks imminent." We are now getting the breakout, but gold was the first to break out of its pennant.

My point is that silver needs to confirm gold's breakout. In other words, silver also needs to breakout from its pennant to the upside. When it does, I expect that both gold and silver will head higher.

Published by GoldMoney
Copyright © 2006. All rights reserved.
Edited by James Turk, alert@goldmoney.com

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