Wednesday, March 7, 2012

Silver and Gold Next Buying Opportunity: $25 and $1500

All markets have started to correct including Gold and Silver. Let's see if we can analyze trends to find entry points for the precious metals. I should note that If you have little exposure, any time is a good time to buy physical Gold and Silver simply to protect yourself against financial apocalypse, even if the possibility is remote. Simply view it as an insurance and one where you are likely to get your premium back !

First, let's have a look at Silver which have been correcting since April 2011 after nearly hitting 50 USD. (Charts:

We can clearly see a descending channel since April 2011 and if the trends continue, we should see Silver close to 25 USD where it should be another good time to aggressively add to your positions. Now let's see a longer perspective with a 15-year logarithmic chart.
The long term trend is clearly on the upside and the interesting is that the lower line of the channel is around 25 USD. That means that if you believe in the long term fundamentals of Silver (central banks will have to monetize debt, shortages etc...), you should really be an aggressive buyer below 26 USD.

Now let's have a look at Gold with a chart between October 2010 and March 2012 which shows Gold peaked in September 2011 and have been correcting since. If the trend continue we could reach about 1500 USD.

If we look at the long term chart, here again there is a clear uptrend channel with the lower line just below 1500 USD and it would again be a tremendous buying opportunity like in October 2008 or August 2005.
To conclude based on the trends mentioned above, we could be close to a multi-year buying opportunity for both Gold and Silver. There is no way to tell for sure, but if the chart continues their trend, those opportunities should occur in April or May 2012. There is always the Iran war scenario (where precious metals would just go ballistic), but I very much doubt that Obama would go to war against Iran before the presidential elections in November 2012.

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