Silver will make its move very soonSilver markets have been in consolidation mode for over four years and that looks like it is about to end. The silver market has been consolidating at the 78% retracement mark from the October 2008 low of $8.4 to the April 2011 high of $49.82. The market has been toeing the 200 month moving average for support and the 50 month moving average as resistance. The monthly volume has been increasing for the past two and a half years with prices trading between $13.62 and $21.225 in this time period. I am expecting a breakout this month or possibly July at the latest.
The last time silver boomed and busted, in the early 80's, the market took 30 years to trade back up to the highs and make all time new highs. I would argue that 1980 high, of around $41.50, was artificially inflated due to a cornering of the market by the Hunt brothers and should probably not have traded above $15 or so. There were rumors on the Comex exchange of clerks who were hired specifically to scout out when the Hunt brothers were walking to the exchange and the clerks would run back to their brokers and tell them so their brokers could get long before the Hunt brothers entered the trading pit and began buying.
The recent period when silver made a new all time high, the run up from 2003-2011, was exacerbated by quantitative easing and the expectation of future inflation through dollar deflation.
I would expect silver to start to break out of this symmetrical triangle by the end of July at the latest. The market should find resistance at 17.30, 20.40, and 24.30 area. Support can be found 13.60, 12.30, 10.60 and 8.40 regions.
If I had to take a guess, I would expect the market to move higher. I would look for two weeks of settling outside the triangle before entering the market either way. Remember, silver markets are settled every day at the weighted volume average price of the trading between 1:24-1:25 eastern time so the weekly settlement occurs on Fridays between 1:24-1:25.
