What a year, or eight months. Silver rallies from $19 to near $50, then drops to the $32 range. A 150% gain in silver in eight Fibonacci months, sounds like a pretty overbought situation.
Gold in the same time frame lagged badly, but all of that was predicted by me late last August due to the consolidating “B wave” in silver that was preceding what I felt would be a “massive rally” in the metal. Quite simply I said, investors will view silver as “cheap” relative to gold and they will buy it instead of gold. I realize that makes no logical sense, but since when are the herd behaviors ever logical?
Many investors use the iShares Silver Trust (NYSE: SLV) and the SPDR Gold Trust (NYSE: GLD) to trade the metals.
So, what’s next for both gold and silver in their bull markets? When dealing with human behavioral patterns, it’s as much art as science, so I do my best to ferret out the coming pivot highs and lows, and here is where I am at right now:
Gold should work higher in a current “5th wave up” from the $1462 pivot lows to a bogey target of $1627, and once that is hit or close investors should be enjoying rallies in the gold and silver stocks but looking to trim back positions aggressively. Where that forecast could go wrong is if we close much below $1440 on spot gold before attacking and piercing through the old $1577 highs. As this final thrust up completes, not too many people will be on board because they all just got spooked out of the market with the silver crash.
I expect a bunch to come in near the end and they may get smoked as gold peaks out and reverses hard into a stronger correction than what we just saw. My subscribers will be informed at every pivot along the way as to the best action to take.
Silver will have the potential now to rally back up to the $38.70-$41.50 ranges if I’m right about the gold forecast. We had an interesting retracement in silver that was between two Fibonacci pivots of 61.8% and 78.6%. I have seen retracements that end up around 71% of the prior major wave pattern up and therefore they throw off many Fibonacci watchers who are looking for that lower or higher level to make their entries. This is partially why I think silver has bottomed out in price, but traders are hesitant to make a bold move here.
Silver and gold have another three Fibonacci years left in a 13 Fibonacci year bull market cycle, so other than some intermediate term tops and bottoms and chopping action, I am looking for much higher prices by the year 2014 in both metals.
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