Monday, March 21, 2016

Silver (SLV): Shine Bright Like A (Silver) Diamond

One of the greatest weapons a person has is creating doubt in the mind of your opponent which has the effect of exhausting them with mental calculus about a particular attack or maneuver that wears them down more than any actual assault. We see this in investing and the stock-market all the time with false breakouts, gap-ups and divergences that seem to go no-where. The recent rally in gold I fear is an example of this - "gold bugs" have been forced to hibernate for far too long knowing full well that precious metals in times of uncertainty and increased voltality are an excellent store of value which has most recently resulted in the price getting driven up to nosebleed levels. I've been saying for a few weeks now that we need to calm down and have a healthy retracement before continuing onward.

One of the reasons I have not enjoyed this recent rally in Gold as much as the rest of the market is that historically in gold bull markets Silver typically leads. We may have witnessed a breakout from some long term channels on Gold's charts, but not Silver's. As we cast an eye towards silver's charts it has yet to follow gold's example by breaking out from it's long term downtrend. I would expect in the coming weeks that when Silver (SLV) breaks out (and it looks very close) Gold will follow.
I still love precious metals and I've been their biggest champion when I first started noticing signs of life last April, but after a bit of a correction by Gold and confirmation signal with Silver's breakout I think this rally may finally be underway.