|
Exponential Trend Passes Test |
 |
 |
 |
|
Written by Thomas Anderson
|
|
Wednesday, 16 February 2011 00:16 |
I initially created these exponential trend charts last November. In the subsequent three months, gold and silver corrected, but both of them remained on-trend. In fact, gold fell to exactly the trend line and followed it upward. I therefore feel more confident than ever that precious metals (and likely other commodities) will blast off this year! Of course, that will be largely because fiat currencies nose-dive.
From the gold chart, I would expect another leg up to around $1600 before a summer pull-back to around $1550, followed by a year-end run to around $1800. Gold is so tightly following the trend that it's hard to see it deviate much from that prediction without breaking the trend.
The silver chart is a bit less predictive, with a floor in the low $20s and a ceiling at infinity. I would expect silver to roughly follow the same pattern as gold, but probably with much more volatility. We could see $40 before the summer and perhaps $50, $60, or higher by year end. There may also be vicious pull-backs though. By the time the year is through, the floor for silver will be in the low $30s, which is right about where we are now, so we could see the price double and then halve again before continuing higher.
Obviously, this bodes well for precious metal investments. I think the best course to make outsized gains is to buy out-of-the-money call options on good mining companies (Silver Wheaton, Yamana Gold, Agnico Eagle, etc.) with expiration in 2012. That's a long enough time horizon to ride out any interim pull-backs. You might even be able to take profits mid-year, buy again lower, and make even greater profits by expiration. Especially if silver yo-yos wildly.
The more conservative tack is to buy physical metal, preferably in an offshore, allocated account. I'm partial to BullionVault. Just for signing up, they give you your choice of a free gram of gold (worth about $44 at today's prices) or a free ounce of silver (worth about $30 at today's prices). It's hard to beat free! No commitment necessary. Give it a try!
|
|
Last Updated ( Wednesday, 16 February 2011 01:50 )
|
