Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19
Silver Is Cheap – And Getting Cheaper - 7th Oct 19
Stock Market Back to Neutral - 7th Oct 19
Free Market Capitalism: Laughably Predictable - 7th Oct 19
Four Fundamental Reasons to Buy Gold and Silver - 7th Oct 19
Gold and Silver Taking a Breather - 7th Oct 19
Check Engine Warning Light ECU Dealer Diagnostic Cost - Land Rover Discovery Sport - 6th Oct 19
Natural Gas Reloads For Another Price Rally - 6th Oct 19
Understanding and Purchasing different types of Plastic Building Materials Online - 6th Oct 19
Craig Hemke: Ignore the Elliott Wave “Buffoons” Calling for a Gold Crash - 6th Oct 19
Stock Market 6 Month Trend Forecast Conclusion - Video - 6th Oct 19
The True Causes Behind the Yield Curve Inversion and Gold - 5th Oct 19
Strategies on how to be a Successful CFD Trader - 5th Oct 19
Gold Stocks Correction Underway - 5th Oct 19
Climate Change When the Levee Breaks - 5th Oct 19
Federal Reserve Bank ‘Guarantees’ Dow Will Not Sink Below 26k - 5th Oct 19
The Russell and Transportation Tell A Completely Different Stock Market Story - 4th Oct 19
Confidence Drives the Economy and Trump’s Trade War Is Killing It - 4th Oct 19
ADL Predicts Crude Oil Prices Will Fall Below $40 - 4th Oct 19
Investing Money? Why You Need a Reputable Accountant - 4th Oct 19
Stumbling Manufacturing and Rising Gold – Now or Later? - 4th Oct 19
Silver Eyes Fourth Quarter Rebound - 4th Oct 19
Gold Price Forecast to Exceed $10,000/Ounce - 3rd Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Gold and Silver Trend Line Targets

Commodities / Gold and Silver 2010 Dec 20, 2010 - 06:16 AM GMT

By: Howard_Katz

Commodities

Best Financial Markets Analysis ArticleRight now commodities are where the action is in the financial markets.  And the precious metals are where the action is in the commodities market.  And silver is where the action is (for the time being) in the precious metals markets.

Silver can be described as gold’s little brother.  It lags along behind gold, underperforming for a long time.  Then, all of a sudden, it comes to life, makes up all of its underperformance and goes on to exceed gold to the upside.


Gold has a reputation for stability and conservatism.  Silver is volatile and subject to big price moves – both up and down.

The key technical measure on silver at the present time is the price objective line, which started in March 2008 at 21.  Technical theory does not say when silver will reach its price objective, only that at some point it will. Further, this is a minimum price objective.  The commodity may get up to the objective line, back away for a while and then make a second return to the line.

The chart on page 1 contains a great deal of information about the course of the price of silver over the next few years.  But to understand the chart properly, it is first necessary to be able to read…THE ENGLISH LANGUAGE.

I am sure that, when you were back in the 8th grade, you used to grumble about your English course.  “What use is all this stuff anyway?”  “I can read OK.  What I want to do is to get into the real man’s world where they are making money.”

Well, here you are in the real man’s world where we are making money.  (I moved from gold into silver in mid-September of this year held for the big autumn run-up, briefly stepped aside in November and then reestablished my silver position.)  And your instructor is telling you that one of the requirements is the precise use of the English language.  Your 8th grade English teacher was right.

The price objective line in silver is full of information, information which can make us the big bucks – if it is interpreted correctly.  First, a price objective line, which occurs with regard to a triangle, is different from a price objective point, which occurs with a head and shoulders, a rectangle, a flag or pennant, etc.  The point gives us one number.  The line gives us many numbers spread out over time.

For example, a pennant formed in silver in November with a price objective of $40 (probably by mid-February).  This is one number, simple and easy to play.  However, the price objective line for the ascending triangle in silver on p. 1 is continuously rising.  It is about $60 right now.  It will be at $100 in January 2012, and by Sept. 2012 it will be at $150.  This does not mean that silver absolutely has to get to one of these points.  But it does have to get up to the line at some time.  Clearly, the nearer points on the line will be exceeded, but the further points will never be attained.

Here is where I have difficulty and plead for the help of the English teacher.  For example, I may make the statement above, “The price objective line in silver will be at $150 by September 2012.”  Indeed, this is a true statement.  But some subscribers will read this as, “Silver will be at $150 by September 2012.”  This is a much simpler, but wrong statement.  It is so much easier to deal with the simple than the true.  It is sort of like the case of the policeman who comes over to help a drunk looking around in the gutter.  “I lost my car keys” says the drunk.  So the policeman helps him look.  After they have looked for a while, the policeman says, “Are you sure you lost them here?  And the drunk says, “No, I lost them in the middle of the block.”  So the policeman says, “Then why are we looking here?”  And the drunk says, “The light’s better here.”

This technique does not work too well for finding lost keys, and it certainly does not work at all well for taking money out of the commodity market.  You cannot neglect essential elements of the puzzle simple because “the light’s better here.”  This is what I mean by precision of language, and if you did not learn this in 8th grade, then go back to your teacher, beg her forgiveness and crack the books on a special study course to learn now what you should have learned then.

As noted, silver is more speculative than gold.  As a result, when the precious metals markets are conservative, traders move into gold.  During such periods gold will outperform silver.  For example, starting in 2008 the media in this country started screaming “deflation.”  Both gold and silver got hit hard, silver worse, but they recovered quickly.  In Sept. 2009, gold broke out of its ascending triangle to the upside.  A year later silver did the same thing.  By that time, gold had advanced by 25% (March 2008 peak to early Sept. 2010), and silver was flat.  (OHE was able to remain in gold for the period up to early Sept. 2010 and then switch to silver at that time.)

A move in silver will normally last half as long as the corresponding move in gold and peak not too far apart from it.  (In early 1980, gold peaked in January; silver peaked in March.  The gold move of the late ‘70s lasted 3½ years.  The corresponding silver move lasted 2 years+.)

A move in silver is a lot of fun because it has great volatility to the upside, but this often happens with regard to commodities.  Special situations develop, and there is simply not enough supply to meet demand.  A case in point was early November when silver peaked at $29.  The silver bulls had been making money through the autumn, and they kept plowing this money back into the market.  The more money they made the more they plowed back, and the cycle built on itself.

Obviously, this cannot go on for too long.  Either the exchange will cool things down by raising margin requirements or fundamental traders will come in with large sell orders.  Either way, the sellers can break the market, and …watch out below.

By the way, there has been a group of people going around the gold/silver web sites alleging a giant conspiracy to manipulate the price of silver in a downward direction.  And I am getting sick of this.  To manipulate any free market is virtually impossible.  If one buys an economic good and then tries to manipulate it higher, one must spend an enormously greater amount of money doing this than one can reasonably make.  And there has been no successful manipulation on record in economic history.

First, this was proven by the free market economists.  Second, it was tried by Bunker Hunt in the late 1970s.  This idiotic venture cost him almost $6 billion of his father’s inheritance money (the H.L. Hunt fortune).

Anyone who wants to make money in the speculative markets MUST anticipate some other people coming in to buy his good away from him at a higher price.  If you can’t see that coming, then you should not be in that market.  I see people coming in to buy gold and silver away from me because Presidents Bush-Obama have been printing massive amounts of money, and this will cause all goods to skyrocket in price with the precious metals first on the march.  But this is reality, not manipulation.  And, quite frankly, a scheme as fantastic as is being alleged, is nothing more than the invention of crackpots.  No one can manipulate market forces for 10-20 years.

If you are listening to these allegations, then you need to wake up and study basic economics.  Good speculation has to be based on economic principles.  If you don’t know what you are talking about, then your chances of making it in the markets are not equal to a snowball in H___.

Since gold and silver will probably peak at about the same time,
I will be looking for signals from both the chart on p. 1 and below to
coincide.

We are in the middle of a powerful move in the precious metals markets.  These markets are on fire, and now is the time to strike while the iron is hot.  You all know that Ben Bernanke is completing a program, called QE-2, which will result in an approximate tripling of the U.S. money supply from mid-2008-mid-2011.  And this will lead to an approximate tripling of the U.S. price level within the coming 2-3 years.  It is to help you protect yourself and make profits from this massive creation of money that the One-handed Economist is focusing on the precious metals markets at this time.  If you would like to subscribe to the One-handed Economist ($300/year), then go to my web site, www.thegoldspeculator.com, and press the Pay Pal button.  Or, send $290 to: The One-handed Economist, 614 Nashua St. #122, Milford, N.H. 03055 ($10 cash discount).

Thank you for your interest.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules