Silver Is Ready to Move to Centre Stage

2010-SEP-13

When I asked in the last alert whether silver is ready to move higher, it was trading at $18.46. Over the following two weeks, silver dropped to below $18, but thereafter the short-term trend changed. Silver has been climbing ever since, and for the past week has been pressing against over-head resistance at $20.

The following chart remains very bullish. Note how the silver price has moved up the past few weeks and is now ready to hurdle above $20.50, which is the neckline of this huge accumulation pattern forming for three years.

When it comes to markets, nothing is certain of course. But patterns do repeat. For example, compare the following gold chart to the silver chart above. Note the similarity of the two ‘V-shaped’ accumulation patterns.

Will silver break out of its accumulation pattern to the upside just as gold did? Only time will tell of course, but I think silver will follow and complete what gold has already accomplished.

In fact, I expect silver to do even better than gold because its accumulation pattern has formed over a longer period of time and is deeper, i.e., the distance from the low of the pattern to the neckline is much greater in silver. Consequently, it is reasonable to expect that silver’s upside break-out from this pattern will be much greater than that which occurred for gold.

In summary, gold and particularly silver are poised for some spectacular gains over the next couple of months.