Silver Momentum Move

I had planned on returning with a review of the general fractal work that I have shown in the past, but decided to delay it for the long weekend. Instead, I want to show the Silver Fractal Momentum chart in comparison to some charts of individual stocks.

In the Silver chart, below, we can see the current Silver move is hitting the blue angled resistance line similarly to the momentum move in early 2006. At this time in the earlier fractal, the Silver move reacted off of the touch of the angled resistance line with a short waterfall decline. Whether we see that short-term weakness or not, we might be more interested in where Silver will run to over the next few months. We can see in the chart that the MACD is rising supported by the rising ADX line. This relationship suggests that from a technical standpoint, the momentum run in Silver appears sound. The dotted angled lines reflect the rate of rise of the 2005/ 2006 momentum run. In some respects this momentum run appears to be a bit more sluggish than the previous one. Thus, the dotted angled line suggests that Silver might run to around $26 into the April to May period, but the sluggishness might mean that Silver will rise a bit longer and a bit higher than that. I'd have to go to longer-term charts to see where angled resistance appears to be on that chart.

I had created the above Silver Chart on 10-22-07 as a bit of a relative timing mechanism for stock investments that I thought I would want to make as time passed. Knowing that several small Silver producers and smaller Silver explorers that have proven up large reserves had moved sharply higher in this time-frame in the prior momentum run, I wanted a chart that might help with investment timing. On January 6th, I ran a scan of stocks for that purpose. What I found in that scan was a bit surprising. The relationship of many of the smaller Silver producers and explorers seemed to be lagging the price of Silver in this current run, though their chart patterns still appear likely to resolve sharply to the upside as Silver continues to rise. What surprised me was that other resource stocks had made big runs in the same earlier fractal time period as well. Included in the list that interested me the most were the charts of PAL and AUA.TO. PAL is basically a base metals company which also produces Palladium. AUA.TO is moving toward a Molybdenum mine. A couple of weeks ago a poster, Pittrader, stated that he liked the chart of Palladium. Fortunately, I remembered the stock scan and was able to step in to buy PAL with some degree of confidence at lower prices.

The chart, below, is the same Silver chart as above except that I have included charts of PAL, SLW, SSRI, and AUA.TO, below. We can see that the price rise in PAL is behind its price rise in the earlier fractal, but I suspect that PAL will soon see around $8.50, then move on up to around the $12 area. The charts of SLW and SSRI are showing smaller corrections much like in the earlier fractal, though the corrections appear a bit larger in this time-frame. I still expect SLW to potentially double from the current $15 level before the Silver run is over, and expect SSRI will likely do about the same. The chart of AUA.TO looks very interesting, here, as its price looks like it wants to bottom almost exactly in the same time-frame that it bottomed during the earlier Silver fractal. I like the chart, and expect AUA.TO to continue the rally all the way back to new highs this year. So, what does it mean if other resource stocks tend to bottom and rally along with a Silver momentum move? Well, I think we are seeing the result of inflation across the whole commodity sector affecting all of the stocks, though it appears investors are reacting to the commodity and Precious Metals price rises with a bit of a delay. As I explained in my editorial of last week, I think that investors are a bit confused by all of the bad news coming out that is generally considered deflationary. In the midst of that bad news crossing the television screen on a daily basis, I think investors are missing what is going on in terms of inflation in the charts of $Platinum, $Silver, $Gold, Wheat, Cobalt, Soybeans, and so on.

As a last comment about this Silver move, we are just now seeing the charts of the smaller Silver producers and explorers showing signs of bottoms and upward movement. I would expect many to have great runs over the coming months. In fact, in the prior Silver fractal many of the smaller Silver stocks moved up multiples in price. I would expect the same to be true in the coming time-frame. Though my stock scan included a large number of these smaller Silver stocks along with the potential of their moves in the last Silver run, I was advised not to list them, here. In the interest of full disclosure, I do own some of the stocks shown, above, plus leveraged positions.

As I mentioned last week, I would like to advise readers of a decision that I have all but finalized. I am looking at the potential of moving my work to a private subscription site. Such a move should free up more of my time to delve into individual stock charts as well as discussions of different potential investment opportunities. This move should allow me to refine many of the different approaches that we have discussed in the past. Our approach will continue to concentrate on the Precious Metals Markets on an intermediate-term basis, though many charts might aid investors in other time periods. We also might extend our range out into other areas of investing in the resource sector. I have changed the contact address, below. Some readers have written requesting that we contact them when the site is ready. If you'd like, we will be sending out an e-mail notification to those whom have requested such when the site is ready. We certainly still plan on continuing with our public editorials into the future.

For the moment…………..Goldrunner.

Below, is the link to the Gold-Eagle Forum where many of us discuss the various topics of the Precious Metals sector………..

Again, I'd like to thank all of the posters at the Gold-Eagle Forum for their daily input. This thank you is especially extended to TQ and to Grininbarrett who have positively affected my growth over the years. I'd also like to thank Pittrader and Aholbroke for their posts at the Forum. Special thanks go to Dr. Vronsky and Westerman for creating the Gold-Eagle site and for editing my work. A very special "Congratulations" go out to Dr. Vronsky and Westerman after Gold-Eagle saw its hit counter ring up 280 million this last week.

Thanks also go out to CaptainHook and David Petch of TreasureChests since I have learned so much from them. They offer a wide diversity of fundamental and technical information and can be found athttp://treasurechestsinfo.com/Nuke/

There are many great editorials that can be found on the Gold-Eagle site at the following link. Master David Petch from TreasureChests is one contributor……. www.gold-eagle.com/research/petchndx.html

Here is the link to a site I use to research the warrants of Precious Metals stocks. I will be discussing some aspects of the leveraged use of warrants later in this editorial series. http://preciousmetalswarrants.com

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