A client who trades commodities puts a lot of faith in triangle patterns. In a recent email to me and other friends, he posted the above 13-year graph of silver. His comments:
If a person does not know something is possible, it is hard or impossible to take advantage of important possibilities. A prepared mind is a great advantage.
I have been following the commodity markets since 1956 and SILVER since 1975. I invite your attention to a possible big up-move in the SILVER price in the period ahead.
I am doing this because I have some type of association with everyone receiving this message, and if I can help you make money I will be happy.
The attached chart of SILVER goes from 1994 to 2007.
After a long bear market the price of SILVER started up in 2001 and doubled in price.
A consolidation of that price increase (see triangle on chart) took place between 2004 and 2005.
There was then another doubling in price ending in another consolidation between 2006 and 2007.
I believe that this latest consolidation will lead to another doubling in price between now and the end of 2008.
There is a P&F objective at $15.75 and another at $20.75.
This latest two-year consolidation can easily send prices to the $25 or $30 level.
Please do your own due diligence and don’t get greedy and over trade!
Remember every market moves in fits and starts, so expect large volatility.
Interestingly, my client’s observations fit nicely with those of James Turk, founder of goldmoney.com, who also likes what he sees in the gold and silver markets.
In his analysis, Turk presents a silver graph that also depicts the two triangle pattern, one from which silver burst strongly to the upside, resulting in a doubling of the price of silver in about six months. That move culminated with silver topping $15 in May 2006. Now, Turk sees a second triangle developing, as does my client.
If silver makes a similar move out of the second triangle, it could go to the $20-$25 level. Considering that silver has “lagged” gold since June 2006, this could be “catch up time.”
Please remember that these are only speculations about potential future price action. Investors who have been around the silver market a long time know that things can sometimes go against the best analysis.
Still, we may see some spectacular fireworks in the silver and gold markets over the next few months, fireworks that could easily send silver and gold higher. Those fireworks could be set off by a continued fall in the dollar or by a widening war in the Middle East.