Friday, September 10, 2010

Gold & Silver On Verge Of Dramatic Break Out

By Rolf Nef: Currently the silver charts are more bullish commented than gold, but gold looks as explosive as silver. The first graph shows gold since the beginning of the current bull market in August of 1999, eleven years ago, on a linear scale. Both trend lines form a wedge, in which the price swings are getting smaller and smaller and the tension is rising like a depressed spring, ready to jump. If the price would be the one of a stock, it probably would go to the downside, as it is typical for shares. For commodities and precious metals, the contrary is the most likely case.

The second graph looks pretty much the same, only that it spans a much longer period: the tops of 1869 and 1980 form the upper trendline, the bottoms of 1968 and 1999 the lower ones. The interpretation is the same as of the above shorter one.

But the graph contains more interesting information: on the one hand side the comparisons of the bulls in 1869 and in the 1970s, which multiplied by a Fibonacci figure and deliver a projection for the current bull.

A parallel line to the connection of 1968 with 1999 drawn through the top of 1934 delivers a trend channel, which shows also the overshoot of 1980. The upper trendline confirms the projection of $7,280.

There is one more important information that this chart delivers: the current bull move is part of a move that started in 1934. If it will top out between 7 and 8'000, the price drop will only be a correction, followed by an even larger on

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