In the “Hi Yo Silver” chart below (see post) Silver had created a series of ascending triangles, which lead to higher prices around 65% of the time. Silver is up 13% since this post, in just 30 days! How much is gold up during the same time frame? Just a little over 3%…. All metals don’t perform the same!!!
Silver gained 10% more than Gold in the past 30 days. It was this potential per why I have been suggesting to pick up Silver!
Click on chart to enlarge
Below is an update to that chart, with a snap shot of Gold. Silver is breaking from the ascending triangle and is testing resistance at line (2).
Long-term breakouts can lead to much higher prices in any product, same should apply to Gold and Silver! How should one play it? Nothing wrong with owning the metal itself, yet what about Gold/Silver stocks?
Below is a “ratio chart” created by dividing the Price of gold by the XAU Index (gold and silver stocks), looking to see which one is performing better.
The ratio chart is breaking a three year support line which is suggesting gold stocks (see this post on gold stocks, GDX & GDXJ) are going to do better than Gold for a while.
Game Plan…Own GDX and GDXJ WITH STOPS, due to the rising wedge and resistance at (1) and (2) in the middle chart! Gold and Silver are looking great….yet clear breakouts from these patterns, in my opinion, are still not in place for either metal yet!!!
The directional arrows on the chart are correct….if the line is going up, gold is outperforming gold stocks and the opposite is true.
You say in your comments that this is a Gold/XAU ratio chart and that is what it looks like but the identification in the blue bar says XAU/Gold ratio.
Did you invert the chart or am I missing something?
Third triangle broke a month ago…sucking silver 13% higher in 30 days. Now a prior high is being tested…
One thing of note…anyone have an idea what fib level silver is testing? From highs in the 80’s to the 1992 low, silver is currently only retraced 38% of that massive bear market. A push past this common fib level would see silver gain a good deal more than it has the past 30 days!
Ascending Triangles break out 65% of the time to the up side. Well, you show 3 triangles ….. 2 already broke to the upside – there is your 65% ….. Maybe this time it will break down.
I’ve been picking up calls on GLD, some JAN 11, some out to JAN 12. And some of the near ones are call spreads. For instance, the JAN 11 120/130 at around 4.50. So if GLD is a 130 in January, I double my money.
One advantage of gold miners, or GLD options, over the GLD shares is tax treatment. GLD is liable to the 28% capital gains tax.
The thing about silver is it’s a lot less precious than gold, so you have to store a lot more of it per $. For people looking for a save store of value, gold has a lot of advantages. But who knows.