The chart below
shows consolidations in gold since 2005 and the subsequent price moves
higher. You can see from the angle of the curve that the next
trajectory move for gold should be above $3,000. If you look at the
move in gold following the first consolidation of 71 weeks, once gold
broke out it advanced roughly 50%.
The silver chart below shows the important moves and consolidations since the advance began in 2003. Note that the last consolidation lasted 91 weeks. After silver was then able to break out above the $21 resistance area, it subsequently advanced roughly 150%. If silver were to replicate a move of that magnitude, after breaking the recent high of nearly $50, it would put the next target for silver at a staggering $125.
The lesson here reminds me once again of the great quote from Jesse Livermore:
“And
right here let me say one thing: After spending many years in Wall
Street and after making and losing millions of dollars I want to tell
you this: It never was my thinking that made the big money for me. It
always was my sitting. Got that? My sitting tight! It is no trick at
all to be right on the market. You always find lots of early bulls in
bull markets and early bears in bear markets.
I’ve
known many men who were right at exactly the right time, and began
buying and selling stocks when prices were at the very level which
should show the greatest profit. And their experience invariably
matched mine – that is, they made no real money out of it. Men who can
both be right and sit tight are uncommon. I found it one of the hardest
things to learn. But it is only after a stock operator has firmly
grasped this that he can make big money.”
You have to buy into bull
markets as early as possible and hold on to your position during violent
gut wrenching corrections. The very reason I have quoted Livermore so
often is that few human beings have the capability to capture the vast
majority of an entire bull move. It takes incredible fortitude and
discipline.
Original Source
