Silver Price Forecast: Silver and the Dow

Silver Price Forecast: Silver and the Dow

 

The Dow making new highs is likely to be very good news for silver investors, because nominal silver peaks tend to come after significant nominal peaks in the Dow. These stock market rallies are driven by the expansion of the money supply, causing a big increase in value of paper assets (including stocks) relative to real assets.

When the increase in credit or the money supply has run its course, and is unable to drive paper price higher; value then flees from paper assets to safe assets such as physical gold and silver, causing massive price increases.

The two most significant nominal peaks of the Dow were in 1929 and 1973. Silver made a significant peak in 1935, about six years after the Dow’s major peak in 1929. Again, in 1980, silver made a significant peak, about seven years after the Dow’s major peak in 1973. So, if the Dow is currently forming a major peak (like I think it is), we could possibly expect a major peak in silver, towards the end of this decade to early next decade. This means we are likely to have rising silver prices for many years to come.

In 1929, when the Dow was making its peak, silver was still in a downtrend which only bottomed in 1931. However, in 1973, silver was already in an uptrend by the time the Dow peaked:

 

Dow vs Silver 70s

The top chart is the Dow from 1966 to 1974, and the bottom one is silver during the same period. Silver was already in an uptrend when the Dow peaked. The Dow made a major nominal peak near the beginning of 1973, with silver peaking about a year after that. Furthermore, silver made a major peak in 1980, about seven years after the Dow’s 1973 peak.

Notice that silver was still trapped within a cup formation (lower than the cup’s high), out of which it only broke out after the Dow peaked.

Below is a current comparison between the Dow (top chart) and silver (bottom chart):

 

Dow vs Silver current bull market

Like in 1973, silver is already in an uptrend long before the Dow’s possible major peak. The uptrend will still be intact, even if price falls further. If the Dow does peak very soon, will we have a silver top close to a year after the Dow’s peak? Also, will we have a major peak in silver coming some years after, like the 1980 peak?

Silver is again trapped within in a cup formation, lower than the cup high. This time the cup is much broader.  Again, can we expect a breakout from the cup’s high sometime soon after the Dow tops – like it did in 1973?

I believe that given the two questions above, the near future of the Dow will be telling for future silver prices.

The Dow’s relationship with the Dow/Gold ratio is highlighting something interesting regarding this current silver bull market compared to the previous two. Below is a 100-year chart of the Dow/Gold ratio:

 

dow gold ratio with Dow nominal peaks

 

In 1929, the Dow peak came at the same time as the Dow/Gold ratio peak; therefore, the nominal peak and the real peak coincided. The 1973 nominal Dow peak came 7 years after the Dow/Gold ratio peak. We are currently almost 14 years past the Dow/Gold ratio peak, and we still have not had a nominal peak in the Dow.

What is this progression in the timing of the Dow’s nominal peak relative to the Dow/Gold ratio telling us? Is this a natural progression or is it proving how increasingly bigger efforts are applied to artificially prop up the stock markets?

Whatever the reason, it has created a setup for a massive financial panic. Value is likely to run from paper assets to silver and gold like never before. While the first part of this collapse of paper assets has been relatively controlled; the last phase is far more likely to result in chaos. This means that the Dow’s collapse could be vicious.

At the same time, after having had a relatively subdued rise since the beginning of this bull market, silver could explode higher like never before, once the bottom is in. The current decline is likely to bring attractive opportunities to increase physical silver positions.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert – hubertmoolman.wordpress.com

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Price Forecast: Silver Bull Market Is Following The Structure Of The 70s Bull Market

Silver Price Forecast:

The 70s silver bull took place during a period from a major peak in the Dow/Gold ratio (1966) to a major bottom in Dow/Gold ratio (1980). The silver bull market started in 1971 and ended at the beginning of 1980.

The current silver bull market also started after a major peak in the Dow/Gold ratio (peak was at the end of 1999).The current silver bull market started in 2001, and it is also likely to end when the Dow/Gold ratio makes a major bottom. See the chart below, as illustration:

 

Dow Gold Ratio long term chart showing Silver bull market

In 2011, silver peaked at the $50 level, while in the same year, the Dow/Gold ratio made a bottom just lower than the 5.75 level. Was that the end of the silver bull market? Will the Dow go on to make highs that are multiples higher than the current high, while the silver price collapses?

The major problem with saying that the silver bull market is over, is the fact that the price has not even surpassed the high of the previous bull market. One can only begin to consider the possibility that the silver bull market is over when the price has gone a few multiples higher than the 1980 price of $50.

Until then, we look for a bottom in the silver price, and the next wave higher in this bull market. Instead, consider the Dow as a peaking bull market, with it being multiples higher than its 1973 high (the high of the previous major bull market).

Comparison of the current and 70s silver bull market

On the graphic below, the top chart is the silver bull market of the 70s, compared to the current bull market of the 70s (the bottom chart).

 

Current Silver Bull market vs 70s Silver Bull market

I have tried to line the two charts up; starting from both peaks in the Dow/Gold ratio (it is not exact, but close enough). The two bull markets are definitely following a similar pattern to some degree.

Notice that the first major peak in the 70s bull market came about eight years after the peak in the Dow/Gold ratio. The 2008 peak in the silver price was also about eight years since the peak in the Dow/Gold ratio.

During the 70s, the peak after eight years appears to have been a significant level, since price really accelerated higher, after clearing that peak. Price also accelerated higher when it cleared the 2008 peak, in 2010. The difference this time is the fact that currently we are having a retest of that peak level (which is not necessarily a bad thing).

If price does not go too far below the 2008 peak level ($21), then we have a very bullish looking pattern. The current retest of the 2008 peak level could mean that if we eventually find that bottom, and go higher, we are unlikely to ever see these levels again.

The comparison seems to suggest that the rally we had from August 2010 to April 2011, is just a prelude to the coming major rally. If the current bull market pattern continues to follow the 70s pattern, then we could have a peak in the price of silver when the Dow/Gold ratio bottoms.

We cannot be sure when this will happen, but should it be about 14 years after the peak in the Dow/Gold ratio, like it was during the previous bull market, then we could have a peak in silver at the end of 2013 to the beginning of 2014.

If the current bull market structure continues to follow the basic structure of the 70s bull market, then price should, at least, clear $140.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Price Forecast 2013: Silver’s Bullish Cup Formation

Silver Price Forecast 2013

The most significant fact about silver, from a charting point of view, is the mega cup pattern formed over a period of more than 30 years.

These cup (or cup and handle) patterns are very bullish formations. Below is a long-term silver chart showing the mega cup formation as well as two smaller cup formations:

silver price forecast

When a cup is formed, it is often an indication that the price will eventually go higher than the peaks of the cup. This is why the mega cup formation is so significant, because it is telling us that the price of silver will eventually go higher than the $50.

For all the cups shown on the silver chart, gold had a similar cup. The main difference between the gold cups and silver cups is the timing. See a similar chart for gold:

gold price forecast

In all three cases, the gold price went higher than the top of its cup before silver did. This means that gold was a leading indicator for the price of silver. In the case of the mega cup, silver has still not gone higher. Based on the fact that silver has always followed gold’s path by eventually going higher than the cup’s high, in the past, it is very likely that silver will do it again by going higher than the $50.

This is a very simple principle, but provides an enormous opportunity to those who are willing to buy physical silver and have the patience to hold on to it no matter how volatile the price swings.

The fact that we have such a big cup is what makes timing the breakout of the cup so difficult. I believe we have come close to the point where the silver price is about to challenge the cup’s high, and eventually breakthrough (more detail coming to premium subscribers only). First though, it has to make the low for the current decline.

On the charts above you can see that during the 70s, silver always went higher than its cup in the year following gold’s similar feat. It has already been more than three years since gold went higher than its cup high. Silver has still not gone higher; however this is reasonable considering the fact that the cup is so much bigger than the 70s cups.

Previously, I have written about how conditions are similar to that of 1973, when the Dow started a crash at the same time that gold started a spectacular rally. That was incidentally the year that silver also started a massive rally, and went higher than the cup formed before that.

Below is a silver chart showing price action around a cup of the early 70s:

silver price forecast

I have indicated a cup that was formed during the late to early 70s. Note that the gold chart also made a similar cup during that time. Early 1973, about the time when the Dow started its crash, silver was still trapped lower than the cup’s high. However, by 1973, the gold price had already gone higher than the cup’s high. In the same year silver went higher than the indicated cup’s high, eventually peaking multiples higher than the cup.

This is similar to today’s situation, with gold having already gone higher than the $850 area, and silver still lagging lower than the $50 area. This would suggest that the peak in the stock market (which I believe is busy happening now) will be the significant signal for the coming silver rally towards and beyond the $50 level.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Price Forecast – Silver Premium Update August 2012

Silver Update

By Hubert Moolman

The silver chart has formed a big pennant like that of the gold chart. What this indicates is that the silver price will likely make a massive move soon. Technically, this move can be up or down. Note that this update is from my premium service originally published on 6 August 2012.

Below is a silver chart with the pennant:

The technical and fundamental evidence that I have collected, and look at, tells me that the price is likely to go upward out of this pennant formation.

On the chart above, you can see that the price has actually broken out (upward) of the pennant. We have to give it some time before we can say that it is a valid breakout. Also, I have drawn a blue line, which could become another area of resistance.

If we were to consider a move down, then a first target of $15 and one lower at $5 would come into play, based on the patterns. A price of $5 (and even $15) does not make any economic sense, given the amounts of fiat money currently available.

However, there is a real threat of deflation, currently, and the effect of this has to be considered when looking at the future silver price. In my opinion, we do have a perfect setup for a massive deflation which will destroy a lot of debt-based value.

Stock market values have been driven for years by this debt-based value, and will, therefore, be very badly devalued. Many believe that such a fall in stock market values will take down the silver price. I do not agree, and have given many reasons why.

Here, I would just like to point out that the current threat of deflation is due to the massive debt levels, and the inability to service those debt commitments. You can just look at the example of Spain or Greece.

Silver is a real store of value and that is its most significant function. The current crisis will cause a massive rush to that which can store value that will not be destroyed by the debt-collapse. Silver is just about the opposite of debt.

Previously, I wrote about how this debt-based monetary system has created what I call a “mirror-effect”, whereby, silver (and gold) is pushed down in value, to a similar extent as to which paper assets such as general stocks are pushed up in value. This mirror-effect clearly shows up on the long-term charts of gold, silver and the Dow.

Below, is a long–term silver chart (real and nominal) from 1850 to present (generated at minefund.com):

I have drawn a vertical red line, approximately where silver was demonetized (1870s). Notice how the real price of silver collapsed after the red line, from about $30, until it bottomed in 1931 at $4.29. It then traded side-ways (from the big-picture view) for many years, until it spiked from about the early 1970s, making a peak in 1980, where after, it bottomed again in 2001.

Technically, the bottom in 2001 was the completion of what would be a remarkable double bottom reversal, with the first bottom being in 1931. After a double bottom formation, there is often a big rally, and that is exactly what happened next. If this pattern continues to follow the pattern of a valid double bottom, it will reach levels that will exceed the 1980 high by at least one multiple, but probably by many more.

The interesting thing about this possible double bottom is the fact that the two bottoms came 70 years apart. This 70 years period also appears on the long-term Dow chart. Below is a Dow chart (from stockcharts.com) from 1900 to present:

On the chart, I have indicated a 70 year period from when the Dow peaked in 1929, to the peak in 1999. The reason for using the 1999 peak instead of the 2007 peak, is the fact that the 1999 peak represents the real peak, since the Dow/Gold ratio peaked in 1999 (like it did in 1929).

Notice the dates of the peaks and how they fit in with that of the bottoms of the real silver price, as well as the similar 70 year periods between. In my opinion, the occurrence of the 70 year period on both charts, in the context as explained above, provides additional evidence of the link between silver’s demonetization (or suppression) and the massive debt bubble of this century – as explained in part 1 of this article.

While the Dow is inflated to the peak in 1929, silver is suppressed to its low in 1931. And again, the Dow is inflated to its peak in 1999, while silver is suppressed to its bottom in 2001.

So, the peaks and troughs, as presented in the above charts, are the manifestation (in visual form) of the debt-based monetary system causing paper and related assets to rise, while suppressing silver. Another way of looking at it is that the debt-based monetary system is fuelling speculation in paper assets by using energy diverted from precious metals.

Silver (like gold) stands in direct opposition to the current monetary system (they are inescapably linked). The fall (and falling) of this system is the rise of silver as money; therefore, massive increases in what silver can buy in real terms.

Looking at a bearish pattern to find critical levels

Below, is 6-year chart of silver, highlighting bearish fractals:

I have highlighted two fractals by indicating 4 similar points on both. Based on this comparison, we could now be at a very critical area. A break-down below the support (about $26), could mean that the current pattern could follow the 2007/2008 pattern, and take price much lower. This is presented not because I believe that price will break lower than the support, but to show why I think we are at a critical level, and why we should be watchfull.

Pattern Previously Covered

Here, is a follow-up on my previous article about the similar flag-type formations on the silver chart.Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

This comparison is still very much valid; only if price goes lower than $26 could it become invalid. In fact, there is a good chance that price has broken out to the upside.

On both charts, I have suggested how the flag patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to h). Based on this comparison, it appears that the silver price might now have found that point 6 or h (at the end of June), and is about to increase significantly.

We could be at very volatile area due to the possible breakout, since this is often the case after a breakout – so be aware! I am of the opinion that silver should make its move higher between now and the end of this month, if this comparison is to be confirmed.

Follow-up on Gold/Silver Ratio

In my last gold update, I covered the Gold/Silver ratio, and explained why I think the Gold/Silver ratio will soon fall straight down. Below is an updated Gold/Silver ratio chart:

On the chart I have indicated a trading channel in which the ratio has been moving for the last five months. It appears now to have finally broken down, out of the channel. This could be a very strong signal that silver and gold prices are about to rise significantly. Again, here we have to watch for a possible retest of that break-down area, before the ratio falls straight down.

Conclusion:

Silver appears to have broken out of the pennant or flag-type formation, and could now finally be setting-up for a massive rise in price. We should, however, be very watchful, due to the fact that we are at a critical area in price and time. There is a big threat of deflation, but, in my opinion, it is this very deflation (brought about by the collapse of the debt bubble) that could be driving silver prices higher.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

http://hubertmoolman.wordpress.com

hubert@hgmandassociates.co.za

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Price Forecast : Silver Market Update

Silver Price Forecast : Silver Market Update

Here are a few patterns that might explain the current state of the silver price, as well as, provide the possible way forward.

Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

On both charts, I have suggested how the patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to f). Based on this comparison, it appears that the silver price is searching for that point 6 (or point f). Previously, about more than 6 weeks ago (after the middle of March), I thought that point 6 (or point f) was already in, or close to being in.

This was my assumption, based on timing: On the 2007 pattern, you can see that from point d to point f was about 10 days, and that this was the same for point f to point h on the same pattern. When applying this to the current pattern, it was expected that point h would be in about 14 weeks after point f (about middle to end March) – similar to the 14 weeks from point 2 to point 4.

This was a reasonable expectation since the market often behaves in such a manner. However, it was the wrong expectation. It appears that the market has extended that cycle (which is not unusual); however, it appears that the bullish expectation is still very much justified. We would need a turnaround very soon though, to continue the mega bullish expectation. If we do not get the turnaround very soon, then price could go even lower than $26 (unlikely).

In my latest gold update, explained why I think this week might bring the bottom for gold. My analysis for silver also suggests that we could see a bottom for silver this week (for the latest next week).

I believe that it is very likely that we will get that massive rally soon.

For more silver and gold analysis and guidance, see my Long-term Silver Fractal Report  & Long-term Gold Fractal Report    or subscribe to my Premium Service.

Warm regards,

Hubert Moolman

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Price Forecast And The Shift To Measuring Wealth In Gold Ounces Instead Of Dollars.

Silver Price Forecast:

The debt-based monetary system creates an illusion of wealth. It allows for claims on real goods to significantly exceed the actual amount of real goods. You then have a number of people believing they have wealth, since they have claims (pieces of paper or tokens) showing that they have these real assets, whereas, in reality, if everyone was to claim the real goods, there would not be enough to go around.

The high debt levels, in some way, represent the extent to which there are more claims than the actual underlying real assets.

During the period of credit extension – that has been for at least 80 years – most businesses are set up to take advantage of this system. The system allows for an easier way to increase wealth (illusionary), since only claims on real assets need to be increased, instead of the actual real assets.

As you come to the end of the credit extension cycle, most businesses are dependent on this credit extension, either directly or indirectly. When the debts become too heavy to bear (no one knows the day or the hour, but there are signs), the debt bubble will burst, and over time eliminate all those business opportunities brought about by the debt-based system, as well as the businesses dependent on it.

When this process reverses, there is little opportunity to trade the claim on an asset instead of the actual asset, and also few opportunities to increase the amount of real assets. Furthermore, instead of measuring wealth in terms of claims on real assets (as is now the case), people are more likely to measure wealth in terms of real assets, especially gold.

Today, after a consistent period of credit extension, we have exactly the situation where most businesses are dependent on the debt-based monetary system. I believe we are moving past the point, where any benefit can be achieved from credit extension; therefore, we have the ideal set up for a massive collapse in the world economy.

The increase in the gold price, in real terms, is the clearest signal that it is becoming more and more difficult to increase real wealth (wealth in gold ounces). It will become even more difficult as the economic decline sets in; eliminating businesses very dependent on the debt-based monetary system. Financial institutions like banks would be at the top of this list, but will not be the only ones.

The shift from measuring wealth in terms of paper claims (dollars) to gold ounces, and the limited means to increase gold ounces, will change the business and investment world significantly, and will create a massive rush into those opportunities that increase gold ounces. The shift is already evident, with some countries possibly trading oil for gold.

Currently, in my opinion, silver bullion and gold miners present some of the best opportunities to increase the amount of real wealth as measured in gold ounces.

Both, silver bullion and gold miners are still trading lower or at its 1980 high, and also at relatively historic lows against gold. Silver offers the best opportunity, at the moment, since it offers less risk than shares in gold miners. However, as the gold/silver ratio falls (which is expected), gold miners will become more and more attractive.

Silver Chart Update:

Below, is a 6 year silver chart:

Silver is making its intention to pass the $50 level clear. It is continuing in a pattern similar to gold did, before it cleared its 1980 high (see here). The next important obstacle is to get out of the flag (at about $35 currently). If it continues the pattern that gold made, then it will blast past $50.

For more guidance on silver and gold miners, I have prepared a Long-term Silver Fractal Report ,as well as a Gold Mining Fractal Analysis Report. You are also welcome to consider subscribing to my free newsletter (enter email on side-bar).

Warm regards and God bless,

Hubert

hubert@hgmandassociates.co.za

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Price Forecast 2012:I Stand By $140 Silver Price In 2012

Silver Price Forecast 2012:

There is a well-established relationship between how silver and gold trade. They often trade similar in the same time period, but also at similar milestones, although those milestones are sometimes reached at different times. This can cause silver or gold to be the leading indicator, depending on the particular milestone.

I have previously used this relationship to predict how silver will trade. Below, is an extract of that update:

Currently, there is another situation in the silver and gold market that provides an opportunity to predict how silver prices might trade over the coming months. I have pointed this out before, in a previous article. Here, I would just like to provide an update, and add a few more thoughts.

This situation or opportunity revolves around the 1980 all-time high for both metals. Gold passed its 1980 all-time high during 2008, while silver is yet to do so. By looking at the pattern of how gold passed its 1980 high, we can predict how silver might do it as well.

Below, is a comparison of silver and gold around their respective 1980 highs:

From the chart, you can see there is similarity in how gold and silver approached their 1980 high. Gold and silver made a triangle-type pattern (marked 1 -3) just before it reached the 1980 all-time high. When it came out of that triangle pattern, it rallied strongly to the 1980 high, which started the formation of a flag-type pattern (marked 3 – 9).

It appears that silver is now past point 9 (29 December 2011), and will now be eyeing that $50 level.

Market conditions often cause silver to fall behind gold, for quite some time, where after, silver normally catches-up in a big way. The fact that silver is still caught-up in a trading range lower than its 1980 high, at least four years longer than gold already, provides a classic opportunity for silver to follow that “catching-up pattern” and zoom to multiples of its 1980 high.

With gold having passed $1700 (twice the 1980 high of $850) already, given the above analysis, it stands to reason that $100 (twice the 1980 high of $50) silver is virtually guaranteed.

There are many indicators suggesting that we are close to a point where silver might catch –up with gold, relative to its 1980 high, in a big way. My recent analysis of the gold/silver ratio also seems to suggest this. So, as things stand, I expect silver to outperform gold for most of this year, and I stand by my target of at least $140 silver by the end of 2012.

For more unique analysis on silver and gold, you are welcome to subscribe to my free newsletter or premium service. I have also recently completed a fractal analysis report for gold and silver.

Warm regards and God bless,

Hubert

http://hubertmoolman.wordpress.com/

hubert@hgmandassociates.co.za

Silver Price Analysis: Silver’s 2011 Big Move – Was It The End Or The Beginning?

Silver Price Analysis: Silver Likely To Make Explosive Move

The price of a good often behaves in a similar manner at or around the same kind of milestone. An example of such a milestone could be a significant top. Price often forms a similar type of pattern at different significant tops – different in terms of time of occurrence. This is a reflection of how market participants themselves often behave in a similar manner when faced with the same kind of situation. This of course makes perfect sense, since it is normal, for example, to rest after you have been extremely busy for a while. For most people, this is true whether it was yesterday, or in 20 years.

In the current silver market, there are some similarities as compared with the 1970s. There are also things that are much different today, in the economic landscape, compared with that of the 1970s. One of the significant things that is different now is the fact that debt levels, relative to GDP, are extremely high compared with the seventies.

In my opinion, this is one of the main reasons why we are likely to have a massive Depression this time around.

Here, I would like to illustrate how the silver price behaves in a similar manner, today, compared with the 1970s. Below is a graphic that compares the silver price chart of January 1978—August 1979 to the period from January 2009—present (charts generated at barchart.com):

I chose these timeframes because price broke out of the significant high (for the relevant decade) around these periods. I have drawn a blue line at the level of the relevant significant high.

Note how the run-up to the blue line is visually similar in both cases. After going through the blue line, price rallied significantly until it peaked at point b (in both cases). It then corrected/consolidated forming a flag/pennant type formation.

Note that in the 70s and in the current chart, price corrected to just above the blue line. It does not mean it cannot still move to the blue line, since, to stay valid, it just needs to stay at or above the blue line. Note that, currently, I do not see any evidence that we will still go lower than the $26 level.

The comparison suggests that we should now rally towards point d and eventually go higher than point b ($50).

The flag pattern formed currently is significantly bigger (in price movement) relative to that of the 1970s. This is possibly indicating that this fractal pattern is growing significantly, which could mean, going forward, bigger price increases relative to the price increases of the 1970s.

The move from point a to point b, on the bottom chart, was remarkable. It took silver from about $17.50 to about $50, a 185% increase. Compare that to the 1970s move of 33.33% (from about $6 to $8). To me, this signals that silver has changed gears (big-time) relative to the 1970s.

The above comparison is also supported by a comparison I did for gold and silver, in a previous article.

Find me also at: picturegoldandsilver – gold and silver analysis contained in one image/picture

Below is a graphic that compares the silver chart (from 2007 to today), to the gold chart (from 2008 to 2010) (all charts generated at fxstreet.com):

The top chart is for gold and the bottom is for silver. I have highlighted how similar patterns exist on both charts. On both charts are ascending triangles, out of which price broke out to the upside. After the breakout, price increased significantly from where both formed a consolidation pattern.

The ascending triangle for silver (roughly 30 months) is much bigger than that of gold (roughly 19 months). The consolidation patterns for both charts took roughly the same amount of time to form, relative to their ascending triangles (about half the time of the triangles).

Based on this comparison, it would seem that silver was at point 0 on 29 December 2011, and it is now busy making its way toward the blue line and will eventually pass the $50 level, just like the comparison to the 70s chart suggest.

Also, if you compare the price movement for silver after it broke out of the triangle to that of gold’s movement, you will notice that there is a huge difference. Gold moved from about $1000 to $1227 (a 22.7% increase), whereas silver moved from about $21 to about $50 (a 138% increase). This, to me, says that there is a massive amount of energy underlying the silver market, and when it is ready to unleash, we will see price/value increases that will stun even the most ardent silverbugs.

The kind of movement we’ve seen since silver has moved out of the triangle is normally associated with moves at the end of a big move. So, either that move was the end of silver’s big move, or it was just an unusually big beginning of a really big move, which suggests we will have an unusually big end of a big move (still to come). Again, I see no evidence to suggest that anything we’ve seen so far was the end of the silver bull market, so I am expecting the latter (i.e. a very powerful upleg yet to unfold).

The real power of this expected move is likely to be released only some time after price has surpassed the $50 level.

Below, is a video that illustrates the principle discussed here:

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my free newsletter or premium service. I have also recently completed a fractal analysis report for gold and silver – more detail on my website.

Warm regards and God bless,

Hubert

Find me also at: picturegoldandsilver – gold and silver analysis contained in one image/picture

hubert@hgmandassociates.co.za