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Market Timing Report - Silver

By Alistair Gilbert      Printer Friendly Version Bookmark and Share
Aug 10 2009 12:00PM

www.alistairgilbert.com

Silver Report

Silver was decimated in last year’s market rout falling by over 80% in just seven months. Part of the reason is that it is not just bought for investment or jewellery purposes but is an industrial metal as well. Most people think of its industrial use in photography, but in fact it has myriad uses in the medical field because of its antibacterial qualities and more recently in creating superfibres for the clothing industry. Polyester starts life as grain alcohol and, flowing over silver, is converted into ethylene oxide, the man-made fibre’s building block. Warm polyester fibre clothing -- which in the coldest weather wicks moisture away to keep the wearer dry -- is sweeping the outdoor clothing industry. It’s uses in electronics are well known as it is one of the best conductors of electricity. Many of you may already own American Silver Eagles.

Since their introduction in 1986, American Eagles have become a leading silver bullion coin investment product with more than 180 million one-ounce coins sold.

Since their introduction in 1986, American Eagles have become a leading silver bullion coin investment product with more than 180 million one-ounce coins sold.

Yet despite the fact that much of the silver used is recycled again, it has been running a mining deficit for 15 years now. That means that global consumption has exceeded that mined for the last 15 years. So why has the price not exploded? I think it soon will. Silver’s Bull market started in 2001 when it bottomed at $4.04 and at its peak last year it hit $21.35. That is a rise of 528% in seven years. I think that it will do that again in the next seven years. If we look at the quarterly chart below, we have only completed Major Wave 1 (and probably seen the low point of Major

Wave 2.) We still have the biggest waves ahead of us! If you look at the DMI indicator, it is showing us that we are in a Bull market when the blue line is above the red line. Despite last year’s precipitous fall, it never crossed below the red line. The Stochastic is rising and has plenty more upside, but first, look at the DELTA candles. They are still red and that is warning us that first we must complete the “C? wave of major Wave 2 and that will probably take us down into early October.

If we move down to the Monthly chart, we can see that the DELTA LTD points very accurately call the highs and lows of the market. We are currently heading up to LTD 4 due in February 2010. This is reflected

In the MACD histogram which has just moved positive but the more sensitive Stochastic is firmly pointing down in a rising market, warning us of the imminent correction.

Moving on to the weekly chart, we can see that the Medium 5 is due (and is probably in) and whilst the Stochastic remains positive, the MACD histogram has failed to rise above 0 despite a 250 point rise in silver and this has bearish implications for the weeks ahead

This is one of my most interesting finds in the Cycle work that I have done this last week. There is an 118 week Cycle and each time it has occurred at the top of a major “B? wave pinpointing the start of the “C? wave down. On each occasion the “A? was the largest wave!

Moving on to my next Cycle, we have a 46 week Cycle high due this week, which may have happened a few days ago, but it ties in with the

top of Wave 2 of C. It is also worth noting that we are just completing the right shoulder of a Head & Shoulders top which projects down to about $8 which fits in with the $8.27 projection whereby Wave C = 61.8% of Wave A. However, because the right shoulder is higher than the left shoulder, this has bullish implications, and we know from DELTA that the bigger move is up into LTD 4 in February 2010, so we may get the C wave making a slightly shallower correction and the turn coming slightly earlier than the 61.8% in TIME.

I will keep you informed as the waves unfold and try and pinpoint the end of C. The main thing is that it looks like the top of Wave 2 of C was in on Thursday at $15.03 so traders should be looking for a sharp correction here in Wave 3 down.

Alistair Gilbert

 

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MARKET TIMING REPORT: Market Timing Report provides a weekly report, plus additional updates when market action warrants. The reports are for traders interested in the underlying timing cycles which are apparent in every market, allowing advance knowledge of when the markets will turn, either up or down, with amazing accuracy. Based on Alistair’s unique timing methods, Market Timing Report provides timely reports about current trends and upcoming turning points in the Precious Metals and main markets. For more than a decade Alistair Gilbert has provided excellent trading advice and recommendations through his reports and many investors around the world will testify to the amazing accuracy of his timing as a means to determine what the markets will do in advance.