Posted on 09/28/2006 13:12:37 |
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As we suggested in our last few issues, the Gold and Silver markets appeared reluctant to break down that much and here we are again, with Silver having touched $11.78 overnight, close to the mid-point of the apex of the mega-sized pennant formation that has been forming now over a number of months, on the Silver chart. Generally speaking, a market that goes into a pennant formation, especially with the upward ferocity of the Silver market: 9 times out of 10, there''s a very strong tendency for any market entering a pennant formation from the downside, once the pennant formation is complete, for a continuation to the upside that often is with a similar or even greater force with which the uptrend began and even at times erupt higher out of the formation. So, given the unfolding power of the 25 year base in Silver and Gold that''s been coiling up over the period, with measured technical moves that portend much higher moves for Gold and Silver in time, it would indeed appear that the die has been cast and with the inflationary genie out of the bottle and with the insane undervaluedness of Gold and Silver, that we could be looking at an unfolding scenario that may be in just the very earliest stages of what we foresee as being a 20 year bull market at the very least, with a good 15 years upside from here on out that could ultimately see $100 Silver and $1785 Gold.
This week President Pervez Musharraf of Pakistan is in Washington and much ado was made on 60 minutes regarding the importance of maintaining stability in that region as some analysts have described Pakistan as "The most dangerous country in the World". Readers may well recall in our Top Ten Reasons Gold could go higher, that we listed Pakistan as # 7, stating that instability in Pakistan or worse could send Gold prices soaring $100 literally overnight, as this would probably cause India to go on full alert also, adding to heightening tensions.
Almost two months ago, we alerted investors with one of the earliest calls amidst a great deal of pessimism, with our "A New Bull Market in the Making Headline" many of whom were perplexed over our call as it seemed unlikely at the time that stocks were about to rally... Two months later, we have enjoyed one of the strongest late quarter rallies in years and the Dow Jones Industrial Average is 60 or so points from its all time record highs, something that many investors doubted would be seen again anytime soon and even some of the most revered and experienced analysts and newsletter-writers were pretty much say, only in your dreams etc as they were predicting worser case scenarios and while getting to new all time highs has been no walk in the park, with constant reversals each time in draws ever closer, even this very morning, the markets are turning down again, in early trading. However, thus far, each downturn has based out or reversed and the market has clawed its way methodically higher towards this interim summit of sorts, with the S&P 100 and 500 setting multi-year highs in synch...
We have almost never faltered in our views on this economy since calling for new all time record highs by the fall or year''s end back in April 2003 and in reality, various US indices in rotation have been making new all time highs ever since the fall of 2003 in one form or another, right to the Dow Jones Composite Index of some 2,100 of the largest companies in the nation, which set a new all time high September 01, as we commented, apparently unfazed by the Fed''s 17 consecutive rate hikes since 2004, and now today, the Generals themselves as represented by the Dow Jones Industrial Average are themselves poised to set new all time record highs that we feel, will not necessarily end in a whimper, but could be heralding better times ahead. Naturally, we always have to be vigilant after a strong rally as there is always some kind of unforeseen danger lurking that could spoil what could be a formidable continuation as contingent with the Dow reaching up to new all time highs, we would also be making a significant intra-year double top in the S&P 500 with lesser performing Transportations also. That is the less bullish scenario. The more bullish one may be base more on the historic principles and similarities we have expounded on, especially given that we are in such a dynamic economy, innovative and transformational era at this time that we could soon be setting new
all time record highs routinely, just as we did half a century and a century ago, for the same reasons and as we have expounded upon in the past, extrapolating out over three centuries, economic and outright market performance is actually, statistically improving all the time...
So while we have much to be thankful for, caution is warranted as Gold and Silver have been quietly and methodically recovering over recent days and in just the same way as we called this market rally nigh on two months ago, we at the same time counseled investors to continue accumulating Gold and Silver as the time to buy is before the next upmove, which we foresee as being near to imminent and worthy of large commitment to the metals markets at this time. In support of our case, Copper has remained notably firm and remains in a broader range in the mid $3.50''s per pound that like Silver and Gold, tends to suggest that we could see a sudden and forceful breakout the upside soon...
Trade Well
From the Desk of Savant
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