A Massive Trade Opportunity In Silver!?

By: Michael Kilbach | Fri, Dec 6, 2013
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Some of the biggest, most profitable trading opportunities only come around once every thirty years or so and we think this may be one of them. Why do we think we have spotted a massive trading opportunity?

  1. We believe a thirty three year overhead resistance level may be broken in the near future and the big money is made in the big trends.
  2. We believe a precedent for this breakout has already been set.
  3. We believe there may be an early "buy signal" in the current setup.

The Precedent: Note the chart and comments below:

Gold Priced in Multiple Currencies 1971 - January 2012 Chart

The above chart measures the price of gold in many currencies and indexes; each one at its long term twenty five plus year breakout price indexed to 100. This makes the gold price and breakout point easy to compare when priced in each currency. You will also notice:

  1. A twenty five plus year resistance line is broken by the price of gold in seven out of the eight currencies.
  2. The price tends to explode higher once the long term, twenty five plus year resistance level was broken.
  3. Not all of the indexes broke out at the same point in time.
  4. A few currencies broke through their long term resistance levels earlier than the others including the price of gold in US dollars. These early breaks turned out to be an early warning signal that the price of gold in most currencies were about to follow.

Gold Priced in Multiple Currencies January 2003 - January 2013 Chart

The above chart simply zooms in on the first chart to help us see:

  1. Each index breaking its long term trend at a different point in time.
  2. Gold priced in the Swedish Kroner breaking out almost two years prior to the Gold/USD. Was the early breakout a signal of what was to come?

Similar Setup: Now let's look at Silver:

Silver Priced in Multiple Currencies 1971-2013 Chart

Let us note the similarities in the Silver chart to the Gold setup:

  1. There is long term resistance ahead of the price of silver except the silver resistance time period is even longer. This may be even more bullish.
  2. The Swedish Kroner and UK Pound indexes have broken resistance ahead of the US index.
  3. The metal priced in US dollars touched resistance and consolidated.
  4. Both metals have been in a major bull market since the early 2000's.

In other words, the multi decade resistance setup that propelled gold from $850 to $1900 may be setting up the same way for silver. To drive home our point and to crystallize our message, please review the next few charts:

Silver Priced in Multiple Currencies January 2003 - October 2013 Chart

Note the similarities between the silver chart above and the setup in gold which resulted in a huge price advance (chart below).

Gold Priced in Multiple Currencies January 1998 - July 2007 Chart

In these charts we can clearly see the metal's priced in two currencies breaking long term resistance in advance of the US dollar price. Then the metals priced in US dollars hit the long term resistance and bounce off. Eventually the US dollar price of gold follows the others to significantly higher levels.

Gold Priced in Multiple Currencies January 1998 - January 2012 Chart

In our opinion the silver and gold bull market is alive and well, and silver may be in for an explosion in the coming months / years. If the price of silver were to follow the setup in gold we would see silver rocket well past $50 an ounce.

However it can be difficult to invest long term if an investor gets caught with significant short term losses and ends up selling in fear. At www.investmentscore.com we try to locate big picture trends and then locate appropriate intermediate term swings to average into and out of positions.

We have written other editorials about other long term resistance levels like this. The end result of the setups mentioned in those articles was explosive price action. If you would like to read more articles, sign up for our free newsletter or learn more about our paid services then please visit www.investmentscore.com.



Michael Kilbach

Author: Michael Kilbach

Michael Kilbach

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/