By The Gold Report
Clive Maund provides a technical analysis on silver and explains why he believes recent movements could be the “opening shot of a a major bull market.”
The last update was wrong. Silver was expected to drop with the stock market, but instead it held its ground and then broke higher last week. The reasons for this misinterpretation, both for gold and silver, are set out in the latest Gold Market update, and will not be repeated here.
On the 6-month chart we can see that while gold continued to advance in December, albeit incrementally, silver continued to be restrained by the resistance at the upper boundary of what is now clear is a Double Bottom base pattern, until several days ago when, under increasing positive influence from gold, it broke clear above it. Since it has arrived at resistance at its falling 200-day moving average it is entitled to take a rest here, if it feels so inclined, and consolidate or perhaps react back a little. This breakout bodes well for the longer-term and may well be the opening shot of a major bull market.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Now we will look at a most inspiring chart which shows that, regardless of near-term fluctuations, if you invest in the precious metals sector here, you will have the deck heavily stacked in your favor. The PM sector has been about the only one that hasn’t become a bubble in recent years, and the way things are shaping up, it could wind up being the only sector that becomes a bubble while most everything else is dropping through the floor.
This chart is the one showing the silver to gold ratio which recently reached a 24-year record extreme as shown by the 20-year chart for this ratio below, which alone is a sign that the sector is close to a bottom and also that a major new bull market is likely to start before much longer.
Finally, it is worth taking a sideways look at the 20-year chart for the platinum over gold ratio, which reveals that platinum is astoundingly cheap compared to goldat a 20-year plus record low. What is all the more surprising about this situation is that it exists at a time when the world’s biggest platinum producer by far, South Africa, which produces about 70% of it, is going to the dogs, as the country is run by zealots who appear to be intent on taking the same ruinous road as Zimbabwe after Mugabe took control. The bullish Falling Wedge visible on this chart implies that platinum is going to break higher soon and probably outperform both gold and silver as all three metals embark on major bull markets.
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Charts provided by the author.
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.