James Turk: Expect A Violent Move Higher In Precious Metals, Especially Silver (SLV, GLD, PSLV, AGQ, ZSL)

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December 5, 2011 11:56am NYSE:AGQ NYSE:GLD

Dominique de Kevelioc de Bailleul: While the silver price (NYSEARCA:SLV) moves higher with the gold price (NYSEARCA:GLD) during this latest consolidation phase in the bull market for precious  metals, Goldmoney’s James Turk expects another violent move higher for the metals, especially the price

of silver.

“This move [in the silver price] is going to catch a lot of people by surprise as evidenced by the  extremely low sentiment readings,” Turk told King World News, Monday, pointing  to the lack of overall enthusiasm in the precious metals market of late, with a  relatively steep contango in the silver futures market chain serving to support his thesis.  “Those low readings are a  clear indication that there is a lot of money on the sidelines that is waiting  to jump on board.”  Get my next ALERT 100% FREE

Such low sentiment readings and steep contango prices in the silver futures haven’t been seen since the first quarter of 2010, when problems in the Greek  sovereign debt market first emerged.  At that time, fears of another Lehman  event, this time from Europe, took the DJIA sharply lower from its intermediate  post-crash peek of 11,250, down to 9,600, a nearly 15 percent correction in  the  30 Industrials.

In contrast, after trading between the $15 and $18 range during a nine-month  period of September 2009 and June 2010, the silver  price climbed higher in the face of a risk-off-then-risk-on-again trade in  stocks of 2010 as the white metal never looked back, soaring to just shy of $50,  from the $15 base of the previous flagpole pattern.

The tremendous rally in the silver price took Wall Street by surprise, as any  asset rising this rapidly typically begets a much wider audience beyond the  silver bug watchers.  That contrarian signal suggested to legendary commodities investor Jim Rogers that the silver price would need to “settle down” before  he’d become a buyer again.  The weak hands had taken over the silver market.

But as the silver bugs remember, all too well, the steep and dramatic drop in  the silver price to $25 sent the weak hands to slaughter, as a series of five  margin hikes compound the pressure of a rapidly falling market to sell into the  hands of the strong.

“During a big correction like the one we’ve just gone through, a lot of weak  hands get shaken out of the market,” said Turk.  “We know that has happened  because of the change in open interest and also because of the smaller volumes  of late.”

Today, the situation has reversed direction, according to Turk.  Silver  futures are back in contango and Jim Rogers is talking about silver once again.  Moreover, as the crisis in  Europe escalates, Europe’s new ECB chief, Goldman Sachs alumnus Mario Draghi is  now printing approximately 30 percent more than the Fed is—and the European central bank  needs to print more, and could get some needed help from the Fed,  according to zerohedge.com.

“Throughout history, when things have gone wrong, they [central banks] print  money … when they print money, you should own silver, you should own rice, you  should own real assets,” Rogers said in an interview with CNBC of Nov. 23.   See BER article.

Back to Turk, who said he’s calculated a target for the silver price during  the upcoming next leg higher.  By taking the April 2011 high and  subtracting the September 2009 and June 2010 base price—a common and fairly  successful technique applied in the use of technical analysis—Turk expects the  next move higher will achieve an all-time record price for the metal.

“The first we have already spoken about, namely the bullish flag pattern on  the weekly silver chart (above). When silver breaks out to the upside, this flag  measures to a target price of around $68 to $70,” Turk explained.  “More  importantly, the jump out of the flag should happen more quickly than the $18 to $50 move we saw back in 2010 and early 2011, which took about nine months.”

Related:  ProShares Ultra Silver (NYSEARCA:AGQ), Sprott Physical Silver Trust ETF (NYSEARCA:PSLV), SPDR Gold Trust (NYSEARCA:GLD), ProShares UltraShort Silver (NYSEARCA:ZSL), iShares Silver Trust (NYSEARCA:SLV), Market Vectors Gold Miners ETF (NYSEARCA:GDX).

By Dominique de Kevelioc de Bailleul From Beacon Equity Research

BeaconEquity.com is committed to producing the highest-quality insight and  analysis of small-cap  stocks, emerging technology stocks, hot penny stocks and helping investors make  informed decisions. Our focus is primarily OTC stocks in the stock  market today,  which have traditionally been shunned by Wall Street.  We have  particular expertise with renewable energy stocks, biotech  stocks, oil  stocks, green energy stocks and internet stocks. There are  many hot  penny stock opportunities present in the OTC market everyday and we   seek to exploit these hot stock gains for our members before the  average  daytrader is aware of them.

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