The War In The Gold and Silver Markets Heats Up

Both gold and silver have done a lot of base building, and the breakout from their bases is getting close. Last time we spoke I wasn’t ready to hazard a guess when the breakout would happen because there is no way to predict when a base will end with a breakout. And there still isn’t. But look at the following chart showing the daily spot silver price in London.

Even though both gold and silver are positioned pretty much the same, I want to use this silver chart because its picture is much clearer. Also, even though both metals are trading backwardated in London, the backwardation is much deeper in silver, so it has greater upside potential when the breakout occurs. Meaning, the gold/silver ratio will fall as silver outperforms gold.

The point here, Eric, is that silver looks very close to a breakout and ready to start climbing higher. The chart above also shows the head-and-shoulders pattern that we have previously spoken about (highlighted in green rectangles). The three downtrend lines show how silver keeps getting beaten back in its attempts to break higher, which it is once again trying to do as it moves day-by-day toward the point of the large triangle.

- Source, King World News