As long term cyclical
investors, the fundamental picture is our primary focal point, however
technicals can often signal brief periods of opportunity when they arise.
Silver ( $30.83 )
and gold ( $1671 ) have
been exhibiting some recent strength, suggesting we are at or near a
potential breakout to the upside in prices.
An Upside Breakout is considered a bullish signal, marking a
break from a trading range to start a new uptrend. This occurs when
price has consolidated, formed a base, or has been in a narrow trading range.
Then, it breaks above that level, surpassing resistance at the top of
the range.
The duration of the trading range for which price breakout occurs will
provide an indication of the strength of the breakout. In other words, the
longer the trading range the more significant the break.
This is similar to a spring through which energy builds up and is then
thrusted decisively. The price action of the last sessions is
almost a text book example of this type of breakout.
Below we see a current 16 month silver price consolidation which suggests
near term upside resistance at the $ 30.00 level.
Although technical analysis is not always completely accurate,
particularly in the short term, perceiving this as an opportunity with a
larger time frame in mind would be ideal.
The duration of a cyclical bull market cycle can often be measured not in
years, but in decades. Buying opportunities become more limited as the
cycle progresses, while pullbacks become less pronounced, and ultimately the
asset goes into a parabolic
frenzy.
In a recent July 24th GoldSilver
Insiders Action Alert, Mike Maloney suggested that we only had a month at
the most before beginning a breakout with the price of silver.
Touching on a recent rebalancing of his gold and silver bullion portfolio,
Mike stated, "I just felt that this could be my last opportunity to
accumulate silver below $ 30.00 oz".
This opportunity may be brief, as the electoral cycle concludes,
the prospect of a fiscal cliff re-emerges, and central banks
are forced to re-injectliquidity into the financial system to prevent a
Eurozone collapse or even deflationary global credit contraction.
Silver and gold investors on the sidelines should take note. We
could be headed for explosive price breakouts this coming fall.
