Technical Analysis | Gold and Silver Price Charts
Silver and gold prices and gold stocks and silver stocks are ready for a new uptrend. The gold and silver prices both broke out of their downtrends in late January and the breakout is still holding. A test of the trendline is not uncommon and it gives investors another opportunity to buy gold and silver and gold and silver stocks at good prices.
Momentum Rider has detailed numerous times the case for rising gold and silver prices in the future. We will list many of these reasons again in the second blog. The case for gold and silver prices rising sharply in the last six months of 2012 can also be made and this will be covered in a third blog. Finally, the last blog in this series will be provide a review of our top gold stocks and silver stocks that can still be purchased at good valuations.
This article will look at technical analysis reasons for more upside pressure in precious metals for 2012. Momentum Rider first covered the recent breakout of gold and silver back in our Jan. 29 blog. The prices did continue to move up in February but hit a pullback several weeks ago when people misread Bernanke’s comments to mean that the chance of a QE3 is very remote. Bernanke gave comments earlier this week to suggest that it is not off the table. Therefore, this pullback should be viewed as a buying opportunity in our opinion.
As the charts show below, both gold and silver prices skyrocketed from August 2010 and well into 2011. Silver prices went from $17.00 in August 2010 to $50.00 in late April 2011. That is almost a full 200% gain in just 8 months. In addition, silver went from $33.50 on March 17 to $50.00 on April 25 of last year. The gain for that period was almost 50% in just 33 trading days. April could be another good month for silver in 2012.
And for proof that Momentum Rider has a track record of market timing in silver and gold, you can read our blog on the last big “breakout call” written on August 24, 2010. It was literally only a day before the 200% move up in silver started. (click here to read). That doesn’t mean that this call is to the day or even week but it could happen soon.
As for gold prices, they went up strongly as well. Obviously silver has a much higher beta than gold so the percentages were not as much on the upside but they also didn’t fall as much as silver either. Gold started at a price of $1,155 on July 28, 2010 and went up to a high of $1,916 on August 23, 2011. That is a gain of 66% in about 13 months. And, although not as parabolic a move as silver relatively speaking, it is still a tremendous move for gold.
Technical Analysis and “Energy Systems” – Releasing Energy and Recharging
At this point, we need to briefly discuss stock market energy systems. Our Momentum Rider Stock Trading System is based on using energy system principles in the stock market. Whenever a strong momentum price move occurs like a parabolic move, the energy system’s fuel is completely spent by the end and it needs time to recharge. Think of it as a battery or fuel cell. The faster and larger the move, the longer the consolidation and energy recharge phase takes. So for silver, it went up very high and very fast so its consolidation phase is much larger in amplitude and longer in time than gold.
Both the “silver energy system” and the “gold energy system” are almost fully recharged technically speaking right now and they are ready for another strong price move up. And based on energy and momentum storage principles, the bigger in amplitude and longer the consolidation or recharging phase is, the higher and more explosive the breakout move will be.
Silver has been recharging for almost 12 months with a 40% amplitude swing. That is a very big descending triangle formation for silver as shown below. Ideally, the breakout occurs well before the apex in a bullish case and that is what happened in late January. Silver prices have crept up out of the triangle but they still need to pierce and hold the $37 price with volume to get momentum going. But as an investor, the current consoldiation is a good time to scale in before a potentially big move gets away from you.
The MR recommended silver price accumulation levels are between $28 and $37. Our conservative projected technical target is above $60 in the next 12 months or sooner. And as MR will cover in the next two blogs, that move up could even be in the next six months and much higher. The next move could be just as strong or stronger than the 200% move in 2010 and into 2011. The $60 price projection is nullified if the silver price breaks down below $28 in the near term.
Silver Energy System Buildup for Next Big Move Up:
The same energy system recharging has been going on with gold. Its recharging period is shorter in duration at 7 months with a 22% amplitude but its move will also be a large one when it starts its next leg up. The MR recommended gold price accumulation levels are between $1,625 and $1,750. The conservative price target for gold in the next 12 months is over $2,100. And, again, it could be much higher if the short squeeze and momentum forces we will discuss in the next few blogs come to pass. The gold price should not drop below $1,550 or the up move is in jeopardy.
Gold Energy System Buildup for Next Move Up:
Based on technical analysis and our Momentum Rider “energy system’s” work, we are predicting that gold and silver prices will see big moves up later in 2012. Our best guess is that it could start fairly soon based on the move that started in mid-March of 2011 last year. It will probably accelerate its move up in the late Spring and early Summer so it is not too early to start scaling into silver and gold on pullbacks. Today’s prices of $1,690 gold and $33.50 silver are good prices to start your scale-in buying. If the prices drop several percent, then pick some more up on each pullback.
Silver and gold are going to be excellent investments for both the short term and long term based on our technical and macro study work. But silver and gold are very volatile and the trading entries and exits need to be timed properly to maximize your profits and avoid big losses. Be patient with this development and MR will do our best to keep you on top of every big change through our newsletters and blogs. Start out with a small investment until the momentum move up is proven out and started.
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Good luck in your trading and investing,
CEO Jalexa Trading Consultants, LLC
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