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July 04, 2004

Silver, Ready for the Second Lift-Off!
by Yi-Chang Wang

If you haven't bought silver, you better hurry now.

Volatility is often said to be "anti-persistent." High volatility has greater than random chance of following low volatility and vice versa. From trading and investment point of view, hunting for low volatility situation is more important. Once found, we can speculate that a large market move, up or down, is likely imminent.

On the weekly chart (from FutureSource) below, silver had formed a classical flag pattern.

Is the next move up or down? Perhaps better questions are: how far will silver go up and how far will silver go down. What is silver's current risk-reward ratio?

I don't think the down move would go much below $4.00 in the face of bullish fundamentals written extensively by Ted Butler and bearish paper money fundamentals depicted by practically every author of this website.

By the way, $4.015 is the low over the past ten calendar years. Made at November of 2001 (source: www.tfc-charts.com/javachart/SV/M). Do you think the combination of bullish silver fundamental and bearish paper money fundamental will drive silver below its ten-year low?

Other authors can discuss the silver up side more elegantly than I do. But, in the most extreme case, that is, the demise of paper money, you will be glad you bought silver!

So there you have it. In silver's imminent break out, you've got two bucks on the down side versus the up side of positive infinity.

Yi-Chang Wang

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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