Apr 212011

In the Elliott Wave Analysis of Comex Silver posted on 23 Nov 2010, I had warned readers that once the complex fourth wave (within the 3rd wave) was done, we will see the continuation of the move strongly to the upside (because we will still be in the 3rd wave mode). This is precisely what happened. (The May contract dipped to 2640 before climbing higher).

I am hearing incessant calls for an update on Silver, and frankly we can sum it up in three small words “Don’t be short”. If we get any dip towards 42 in the cash market, there will be hoardes of buyers.

  17 Responses to “Elliott Wave Analysis of Silver”

  1. Sir is 50 the ultimate target for 3rd wave? what are the likely targets for 4th n 5th wave? Sir in 3rd wave such a sharp vertical rise is possible ?

    • Keyure, There is no way of predicting where an extending wave will finish. It can keep going for a considerable distance. We will discuss 4th and 5th wave targets once we know that the 3rd wave is finished. The main point now is not to be short.

  2. Guess 55 if one likely target for Silver. (55 is a Fibonacci number). As a wild guess I would even stick out my neck and say 61.8 could be the final target (as part of the excesses), given the fact that speculators are using every bit of the political uncertainty in the West Asia economies to make money and cover the losses they made during the stock market crash of 2008. The Quantitative Easing (1 & 2) may not have helped a lot, but sure is doing it’s bit. Those who had the money power, borrowed more money for their speculation activities.


    • Hi Raju, A standard book is Prechter’s Elliott Wave Principle. You will probably find a free copy in the internet if you search patiently.

  4. Sir, considering Silver dropped in 5 waves from the Hunt Brothers high of USD50, i’m looking at this as a massive B-wave unfolding that will lead ultimately to a multi-year devasting C-wave back to USD3 levels. In such case the count would be A-B-C. And the top, all but imminent. I’m no expert, but this looks like a classic commodity blow-out. What’s your take? :)

    • Hello Akshay, while we all watch in awe at what is seemingly a bubble, I can only suggestv that now is not the time to sell Silver. This is especially the case if one is looking for a low-risk trade. My wave counts appear on the chart. You are suggesting we are in a B wave, but B waves should be made up of 3 waves, and I am looking for 5 waves in this run up.

  5. Hmmm… Yeah, I agree, selling at this point wouldn’t be the wisest thing to do. But, is there any specific reason why this can’t be a three wave move, A-B-C, instead of the 1-2-3-4-5? Cause, given an impulse down from the Hunt Brothers high, we should logically only expect a correction. Is there no possibility of this being a correction?

    • Akshay, the downmove following the Hunt Bros episode was a correction of the prior excess, in my view. The current rally is an impulse wave. One can count waves in many ways, and we wont know which is the correct count until later.

  6. Sir:

    Can you please take a look at Silver and Gold again, they had some major corrections today.

    • Mannish, Thanks for your comments. I’m afraid that currently I won’t be able to look at intraday moves in most instruments because of lack of time (being a full-time Treasury Manager). But the movement in Silver is a bit scary !! I think a safe level to buy now will be 39.70, but the brave can venture long at 42.60. Stops need to be a bit wide for now until market calms down. No question of trading from the short side in Gold or Silver for now.

      • Sir:
        Thank you for your quick response. Do understand your position, thanks for the update though, we novice continue to learn from you and yearn for more knowledge in any form available.

  7. I am afraid you have got it wrong ramki. NOW is the time to short silver as it falls into abyss over the next 6 months or so.Silver should be bought only around 38-40k in rupee terms. Most will be surprised by the intensity and degree of fall.

    • Niraj, Thanks for the comment. I think readers would value an opinion more if one made a case for it, like giving a technical or fundamental reason for the opinion. I hope you are right about Silver!

  8. On SIlver, it doesn’t look like a 4th wave we’re seeing. To me, the correction is too drastic.

  9. Ramki,

    Given the recent development in silver and gold markets, I’m sure all of us would love to hear what you’ve to say about their future. Or this is just a short-term rally because of QE3 rumours?

    Regards, Aditya

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