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Silver: Epic Reversal

On January 11th, we expected the US Dollar to top as Sentiment was uber-bullish, which would lead to a nice rally for Gold, Silver, and (Mining) stocks. That day, the USD index closed at 81.35, Silver at $29.89, and Gold at $1,641. (Click HERE for the article)

Today, the USD stands at 78.90, Silver at $33.89 and Gold at $1,733.50, so we got what we expected.

On January 9th, we posted the following chart, which compares the current silver "bubble" to the Nasdaq Bubble a decade ago:

Silver vs Nasdaq
Larger Image

(Click HERE for the entire article)

Now let's see where we are today.

Just like the Nasdaq, Silver has set a lower/equal low, accompanied by a higher low of the MACD index, and has now rallied quite sharply:

Silver Chart
Larger Image

Compare this to the Nasdaq:

Nasdaq Chart
Larger Image

An overlay of both charts shows us where we are today:

Silver vs Nasdaq
Larger Image

If we zoom in a bit:

Silver vs Nasdaq

If the pattern holds, we should be about halfway the "Bull trap", as many will view this as the Return to "normal".

Bubble Phases

If the pattern doesn't hold, and silver blasts through $40, it's probably on it's way to the all-time high. In that case, the next big move would be to the upside, with potential targets of $70 and potentially tripple digit silver prices.

As long as the pattern holds, I would be careful if silver hits $38.

 


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