Silver is having a great run. I've been bullish since the breakout of the congestion at $20 (cup & handle pattern) but I did not expect this much strength.

I think the 2008 low was the Major Wave II for silver's bull market and we may now be in Major Wave III. Within Major Wave III we may be in Primary Wave (3), and within that in Intermediate wave 5. For commodities, fifth waves are the strongest, usually driven by fear - in this case fear of inflation, dollar devaluation, COMEX defaults, industrial shortages, etc. An example of an extended 5th wave was in the NASDAQ in 2000. See http://www.safehaven.com/article/20661/y2kqe for a comparison of NASDAQ under the Y2K spell and Silver under the QE2 spell.


Late last year Silver thrice tested the top of the multi-year consolidation/uptrend channel (light grey) that it had established since the 2008 shakeout. In Feb this year it broke out of that topline and established a steeper channel (white). At the moment it is testing the upper boundary of the new channel. If it ultimately crosses over and finds support on the top of the channel, Fibonacci ratios suggest an optimistic target of $63 for the current run to a Major Wave (3) top. As long as the price remains in the current narrow (dark-grey) channel I feel good about the $63 target. We might see a speed bump at the 1980s all-time high of $50 as that is an obvious point of resistance.

Wherever it tops, Major Wave (3) will probably retrace up to 50% (!) of its advance (from $20 to $60) => retrace to $40 for Wave (4) before wave (5) begins. That would take silver to dizzying heights. However that is probably many years into the future.