Hi Ho Silver

Gold is the ultimate asset and investors who took my $1778 buy recommendation are looking good.

The big question now is: Will the traditional Chinese New Year rally occur, or will there be a test of the recent lows?

(Click on image to enlarge)

daily gold chart

If gold moves above the neckline of this inverse head and shoulders bottom pattern, Chinese New Year and western hedge fund buying should push the price to $2025, and maybe to the all-time highs near $2100.

A rally over the neckline would also take out the main downtrend line, and that would bring in additional buying by technical players.

(Click on image to enlarge)

“scenario number two” chart

If the neckline and trendline resistance overwhelms the buyers, a double bottom pattern is likely.

The good news is that both the H&S pattern and the double-bottom have the same target price of about $2025.

(Click on image to enlarge)

Weekly charts should form the “meat and potatoes” of any technical investment program, and this gold chart is particularly impressive. 

Note the nice upturn in the five-week moving average (5WMA).

As good as gold looks, silver looks even better!

(Click on image to enlarge)

daily silver chart

Silver has already pushed above the main downtrend line and seems poised to push above resistance at about $26.50.

QE and government borrowing have created significant inflation in bond, stock market, real estate, and OTC derivative markets.

Institutional money managers have purchased only in limited amounts of gold and silver (and related miners) because they do not see inflation in traditional indexes like the CPI.

The CPI (consumer price index) needs to be revamped to reflect goods and services used by the average citizen…

But even if it stays as it is now, I’m projecting enough of an up tick in the CPI index to produce significant institutional interest in the miners.

(Click on image to enlarge)

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Katy Lin 3 weeks ago Member's comment

Good article. I hadn't really thought about silver, only gold.