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?
- 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.
- We believe a precedent for this breakout has already been set.
- We believe there may be an early "buy signal" in the current setup.
The Precedent: Note the chart and comments below:
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:
- A twenty five plus year resistance line is broken by the price of gold
in seven out of the eight currencies.
- The price tends to explode higher once the long term, twenty five plus
year resistance level was broken.
- Not all of the indexes broke out at the same point in time.
- 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.
The above chart simply zooms in on the first chart to help us see:
- Each index breaking its long term trend at a different point in time.
- 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:
Let us note the similarities in the Silver chart to the Gold setup:
- 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.
- The Swedish Kroner and UK Pound indexes have broken resistance ahead of
the US index.
- The metal priced in US dollars touched resistance and consolidated.
- 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:
Note the similarities between the silver chart above and the setup in gold
which resulted in a huge price advance (chart below).
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.
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.
