Wednesday, November 2, 2011

Stewart Thomson: Inverse Head & Shoulders Pattern in Silver Largest in History

Stewart Thomson of Graceland Updates discusses silver's massive inverse head and shoulders pattern as well as the importance of valuing your wealth in OUNCES rather than dollars in his latest update.
A good reminder to focus on the size of your STACK rather than the number of digital zero's in your brokerage account (which can be ctrl/alt/deleted by Jon Corzine).

I want to expand on the “Van Gogh” head & shoulders pattern that I’ve laid down on the silver bullion chart. Click this gargantuan silver base pattern chart now. Notice the right shoulder that I’ve highlighted with the circle on the far right of the chart.
The right shoulder, incredibly, was created by the 2008 waterfall that took silver down to about $8.40. A head & shoulders pattern remains in play, one that is arguably the largest in world history, as long as the silver price remains above that $8.40 price point.

Attempting to flip trade your way through the crisis in the silver market can’t work anymore. This base pattern is truly enormous. Just the pullback to the neckline is a move from about $50 to $26, and that destroyed huge numbers of leveraged silver traders!
The price could easily drop into the low $20s, or lower, and have no effect on the overall bullishness of this “all-epic” price pattern. It could skyrocket from here. The point of the matter is that you need to accept $20 leaps and falls in the price of silver as unpredictable blips on the price grid. Few will succeed in doing so, and most will be destroyed by price volatility. Focus on the biggest picture you can envision.
By early 2011, the price of silver was trading around $33, which is where it is now. To be brutally frank, the obsession with building dollars of wealth is being revealed as a mirage, and soon even those who bought gold and silver at the lowest prices may find yourselves asking if you are really any richer.
Is owning one ounce of silver, with silver trading at $30 an ounce better than owning 2 ounces trading at $10 an ounce? In a dollar-based world, a crisis-free world, the answer is yes.
In this crisis, the answer, sadly, is…No. Don’t pay up for gold or silver, but focus on getting more, because the dollar-based mirage is only a seed right now.
Just as most of you have been shocked by the various stages of the crisis that have occurred to date, I predict you will be shocked with the intensity and velocity that dollar-based wealth turns into a mirage.
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