http://www.minyanville.com/businessmarkets/articles/silver-wheaton-corp-silver-prices-investing/9/2/2010/id/29915

Editor's Note: David Banister is the chief investment strategist and co-founder of ActiveTradingPartners.com, a small-cap portfolio and market advisory service. See more of his commentary here.


Silver is one asset class I don't cover very often, but have been largely bullish on since $6 an ounce many years ago. It can be considered “poor man’s gold” as they say. I believe silver is about to stage a pretty large advance based loosely on the Elliott Wave pattern I see unfolding after a nine-odd-month consolidation. (Obviously, there are also fundamental fiat currency/debt events worldwide that give it the underlying bull chart pattern.) Since the average person can’t run out and buy an ounce of gold for $1,240 tomorrow, as the unfolding of the fiat crises continues to enter the public psyche, you'll see a strong populace movement into buying silver, silver coins, etc. To wit, many silver stocks are moving up strongly of late, signally an imminent breakout of this precious and industrial metal.

The triangle pattern has taken nearly nine months so far, and a move over $19.50 could start a multi-month run targeting $26-$29 per ounce for starters before a broad pullback. A few silver stocks worth looking at include Silver Wheaton Corp (SLW), which purchases future silver mine production in advance at a discount and is a long-time favorite of mine, and Fortuna Silver, a growing producer and explorer favored by some of the brightest minds in the business. I don't own shares in either, so I have no inherent bias to mention them other than they're worth your time to review sooner than later. (This isn't stock or trading advice; please do your own research and consult a professional if necessary.)

Below is the silver chart and my outline shows my views of a multi-month five-wave bullish triangle pattern on a weekly chart. Silver needs to bust through $19.50 per ounce to confirm, but I suspect we'll see this fairly soon.


Click to enlarge

(iShares Silver Trust (SLV) is trading +0.21 to 19.17 in the pre-market.)

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No positions in stocks mentioned.

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