Over the last year, investors' foray into the world of precious metals has been about as slow and steady as a freight train without any brakes. And while the sector's spotlight has traditionally been aimed in the direction of gold -- the scene stealer this time around is silver.
Last count, silver prices rocketed 70%-plus in 2010, a winning streak that far outshines gold's 24% rally over the same period. Then, when the final votes are counted for the year, it's silver whose taking home the prize for world's second-best performing commodity (just below palladium).
And, as far as the mainstream experts can see -- silver's winning streak is just getting started. Here, the following December news stories capture the public's budding romance with the "poor man's gold."
- "Silver's Sexy Bull Market" (CNBC)
- "Price Of Silver Soaring" (Wall Street Journal)
- "Nifty: Silver Will Be At $50" (Numismaster.com)
So, are they right?
Well, at 1 pm (EST) on Wednesday, December 29, 2010, silver landed on EWI's Metals Specialty Service urgent alert radar. There, long-time editor Mike Drakulich presented the following intraday chart of the metal alongside this critical message (some Elliott wave labels have been removed from the chart for this article):
"A post triangle thrust could soon lead to a very significant [move]. This is critical, edge-of-the-seat action. There are never any guarantees, but high-confidence post-triangle thrusts do provide me with about as good [a signal] as I can get...that an important [juncture] may soon form. This is as good of an Elliott wave pattern as one could ask for."
For those of you new to our pages, here's a brief definition of the "as-good-as-it-gets" Elliott wave pattern for which Mike Drakulich has identified in silver: a contracting triangle:
A contracting triangle, or "horizontal" as it's known for its sideways direction, contains five overlapping waves labeled A-B-C-D-E. In a regular variety, the triangle takes place entirely within the area of preceding price action. In a running triangle, wave B exceeds the start of wave A to set a new extreme. All triangles occur in the position prior to the final actionary wave in the pattern of one larger degree, i.e. wave 4 of an impulse, or wave B of an A-B-C. And finally, once a triangle is complete, it is often followed by a swift, short "thrust" in the opposite direction.
Below is an ideal drawing of the pattern: