Originally published July 13th, 2008.

Last week both gold and silver staged important breakouts from base areas to commence major uptrends. This is a development that we had been expecting for quite some time. In this update we will concentrate on the differences worth remarking on in the silver chart, and readers are referred, as usual, to the Gold Market update for the general arguments applicable to both metals.

Following its overbought peak in March, silver reacted back towards its 200-day moving average like gold, but unlike gold its reaction was largely completed by the end of March, alter which it moved sideways in a trading range bounded by about $16 and $18.50. This trading range may be categorized as a 3-arc Fan Correction, which parallels the one in gold, or as a Head-and-Shoulders bottom or as a Triple Bottom, or all 3 at once, as it has the characteristics of all of these patterns. But whatever, the important point is that it broke out above the clear resistance level at the top of the range late last week, after first breaking out from the Fan. With all moving averages now having swung into bullish alignment and the MACD indicator at the bottom of the chart still a long way from being seriously overbought, a rapid advance to challenge the highs is to be expected in the immediate future. The MINIMUM objective is the March highs, and with the dollar looking set to drop steeply to new lows, the new uptrend is more likely to take the price much higher than those highs before it has run its course.

For those not already long, silver is rated a strong buy here.