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Are Precious Metals in Their Final Run Up?

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The first half of December will include important extremes for silver and the USD Index .

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The sell-offs in silver are usually very volatile and take the metal much lower in a short time frame, so unless you can monitor the market almost constantly and sell during the early part of the plunge (it's hard to get your orders filled during that time), it's best to close early.

Let's take a look at silver from the short-term perspective to see if it confirms the above analysis.


Source: Stockcharts.com

The short-term silver chart confirms the points raised above. Apart from the fact that silver is now near the short-term resistance level (thin blue line), the additional signal comes from the volume. Please note that the volume was much higher on Tuesday, when silver declined, than it was on Wednesday, when it moved higher.

The seasonal tendencies provide us with additional details. This time silver is already closer to the "top" area than it is to the "bottom" one. While the next vertical red line (topping area) is "scheduled" for the second week of December, it's certainly possible for silver to top sooner.

Keep in mind that these tendencies have been very reliable, but often for a "top/bottom is near" instead of exact dates. So, if the top is to be reached soon (or it has just been reached), it wouldn't invalidate the whole pattern.

Because this week's Premium Update includes analysis of gold in currencies other than the US Dollar, it's a good idea to feature similar analysis of the silver market.


Source: Stockcharts.com

The chart of silver isn't that bullish, as is the case with gold, because there's no visible rising trend channel.

The late-February to today consolidation may be seen as a flag pattern, which means that the rally following the breakout is likely to take the ratio much higher -- taking into account the size of the October 2008 to February 2009 move preceding the consolidation.
No positions in stocks mentioned.
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