Analysis of Pan-American Silver (PAAS)

| About: Pan American (PAAS)

Roland Watson (The New Era Investor) submits: Back in the June issue of New Era Investor we carried a technical analysis of the silver play stock, Pan American Silver (NASDAQ:PAAS). At that time, PAAS had pretty much been following the correction in the silver price after the metal’s dizzying rise to about $8.50. This is what we said back then:

Moving onto PAAS, we may expect to see some agreement with the HUI even though it is not one of the index’s components. The count for the same period is below:

The count is pretty much the same. As we zoom into the 14-month correction, we prefer the count below which follows the HUI closely:

Once again, the Y wave at the bottom right may have finished to complete the entire larger correction though a double bottom did not quite form for PAAS. The two lines around the Y wave denote the ambiguity of where the ultimate bottom lies.

Now six months on, we revisit this bellwether silver stock to see how things have been going along since silver’s recent rise to new highs above $9.20. We have no reason to alter the larger picture, though we did leave the ambiguous question of whether the impulse move from April 2001 to April 2004 was the first wave in a multi-year ABC corrective wave or the first wave in a longer impulse wave.

Since we believe that silver is in a multi-decade bull market, the idea that this is some kind of decade-long correction doesn’t make much sense to us, but we’ll put it on the back burner since it is a theoretical possibility in terms of Elliott Wave analysis. The only way to really resolve that is to obtain a 25-year chart of PAAS prices. When we find that, the question will be answered.

In the meantime, we take the 2001-2004 move as just the prelude to something bigger. The correction that has ensued from April 2004 gave the suggestion in our June charts that it was potentially over in May 2005 with the completion of the less common WXY wave. You can see the “Y