Gold & Silver Upside Breakout?
AUGUST 21, 2012
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.
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-inject liquidity 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.
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