Since I sent this update to subscribers on Sunday, September 2nd, silver is up as high as 5.6% intraday; likewise, Pan American Silver Corp. (PAAS) is up 6.5%, Silver Standard Resources (SSRI) is up 19% and gold is up 5.4%. Is the bull market for silver and gold now in full resumption? We think so and will invest accordingly.
Here are the numbers for this week since August 26th.
London Silver Fix Price: $11.95 (+$0.25 on week)
NYMEX Spot Price: $12.02 (+$0.09)
US Dollar Index: 80.75 (+0.08)
Silver RSI: 45.86 (+4.64) (70 overbought/30 oversold)
US Dollar RSI: 45.14 (+2.20) (70 overbought/30 oversold)
RMAR: 0.89 (unchanged) (1.30 overbought)
NYMEX SLI: 1.31 (+0.01) (1.80 overbought)
GSR: 56.23 (-0.25) (15.00 silver overbought)
SLD: 2.04 (+0.04)
GLD: 1.52 (+0.01)
200 and 50 day exponential moving average difference: -$0.25 (-$0.11)
RSI: Relative Strength Index
RMAR: Relative 200 day Moving Average (Refined)
SLI: Silver Leverage Indicator
GSR: Gold to Silver Ratio
SLD: Silver Leverage to US Dollar on a four year rolling basis
GLD: Gold Leverage to US Dollar on a four year rolling basis
My feeling is that the silver correction since May 2006 is almost over if not finished as of the 16th August. Three things make me think this.
1. The 50 day moving average continues to move under the 200 day moving average with a further drop to 25 cents below. Once the 50 day goes back over the 200 day, I would consider that one condition for a renewed bull move.
2. We had a gap up day on silver on Friday. These form when the price opens above the high of the previous day. These are rare and when you look at the accompanying chart, they have been bullish for silver with $3 and $1 moves respectively. Though this is not a sole signal of a finished correction, it should not be ignored!
3. We have also completed an expanding triangle formation on silver which I have also added to the chart. This looks very bullish to me because the completion of the "E" wave normally presages a big move in the opposite direction which has been doubly reinforced by the gap up. I looked up my Elliott books to find out when expanding triangles are most common. The answer was that they are most common at the end of ABC and WXY corrections in the C or Y waves. In other words, we could be looking at the end of this 18 month correction.
Now this does not mean silver will start ramping up a dollar a day, but the downside risk to me is minimal!
click to enlarge