More on Precious Metals Potential Setup

"IF" my analysis is correct that silver and gold are completing ending diagonal patterns into key price support, then the metals should have the biggest rally since the 2011 top. My stop on the entire position in miners, gold and silver remains at a weekly close under 13 on silver.

If these are EDs, when the metals reverse to the upside the rally should be a rocket ride to the minimum projection areas of 21-22 on silver and 1340ish on gold. I think targets at 26 and 1400 or higher will probably play out eventually, but I'm already getting ahead of myself until there is a definitive breakout to the upside.

One of the problems with EDs is they can take their time with the actual launch. Sometimes they reverse immediately after the 5th wave is done and sometimes they have a few false starts and retest a time or two before the real move starts. So, the metals could lift off at any time or they could chop around for several months first. We will find out in the fullness of time.

Posted below are a few more charts with additional analysis suggesting an intermediate low may be in the making. This is all just theoretical based on empirical evidence, though I think this setup is a pretty high-probability one given the massive confluence lining up in price projections and trend line support. As noted several several times now, a weekly close under 13 in silver would likely invalidate the analysis.

Kim Rice 12/20/15

Precious Metals Update (Silver Analysis)

Silver has dipped down to my long-held forecast range of 13.25 to 13.75. The rising trendline from the 2003 and 2008 lows is currently at 13.68 as can be seen on the first two charts below. The low on 12/11/15 was 13.75, so we are essentially there.

Silver's 50% retracement in log scale, as seen on the third chart, comes in at 13.35 area and is still a very viable target that may get hit. This would require a bit of a break of the long-term trendline, but only by about 40 cents or so. Note that the .236 and .382 retracement levels pretty much nailed previous intermediate lows, which adds the potential of the .5 level getting hit.

On the forth chart the 100% expansion of the first wave down in 2011 projects to 13.70 area, so it lines up as a confluence in price with the trendline support at 13.68. So we have two potentially important targets, one of which has come within 5 to 7 cents of getting hit and the other is only 35 cents below that.

The miners and gold are diverging with silver and not making new lows on this latest dip in silver (at least not yet). I view this as a positive development which may support the concept of an intermediate low forming in the precious metals complex. I think a weekly close under 13 in silver would call this all into question and will be my stop on the position I have been accumulating in mining shares, gold and silver. There is also some major cycle timing due around Feb 2017, so there may be retest of lows or deep retracement into that time-frame, assuming we do get a rally in metals here. Pattern-wise it looks like silver and gold are finishing up 5th wave falling wedges. If so, the minimum target for a rally should be back to where the wedges started: 21 to 22 area for silver and 1340 for gold.

Regarding the stock market, I'm still waiting for SPX projections just above 2200 to get hit before looking for high confidence shorting opportunity. I remain flat.

Kim Rice
12/13/15