SINGAPORE: Spot silver may surge to record highs above $50 an ounce by the end of 2011, based on technical chart observations by Reuters analyst Wang Tao.
Silver was one of the strongest performers of 2010 and has rallied by a third so far in 2011, to trade at a 31-year high of $41.93 on Monday.
"The super bull cycle appears to have started from a low at $3.53 in 1993, rising during the subsequent 15 years to the 2008 high at $21.24," Wang said.
"That can be labeled as wave "A", and the subsequent sharp drop to the 2008 low at $8.42 labeled as a wave "B"," he said, adding that prices could continue to rise toward $55.
"Wave "C" could take silver to $54.78, the 261.8 percent Fibonacci projection level of the 1993 low to 2008 high."
Elliott wave theorists try to predict market moves by recognizing repetitive patterns or waves on the chart.
Those waves form in almost all types of markets form stocks and foreign exchanges, to commodities and real estate.
Wang noted the current wave "C" is part of the "A-B-C" corrective wave cycle, which often travels much further than the wave "A", a phenomenon called extension.
"The projection of the extended wave "C" based on Fibonacci ratios takes the price of silver to $54.78, which is likely to happen before the end of the year," Wang said.
Waves basically fall into two types, the impulsive wave, which is typically composed of five waves marked in numbers, and the corrective wave which is essentially broken down into three waves labeled with letters.
Fibonacci sequences -- named after the Mediaeval mathematician Leonardo Fibonacci, who identified a sequence of numbers created by adding the previous two numbers -- form the basis of the golden ratio, and a method to predict future market moves.
Examples of the numbers are 3, 5, 8, 13 and so on until infinity. If two adjacent numbers are used to divide one with another, the ratios work out to be 0.618 or 1.618. The larger the pair of numbers, the closer the result to the golden ratio.
"The wave "C" has surpassed the 161.8 percent Fibonacci projection level at $37.07, based on the length of the wave "A", and it is highly likely for the uptrend to extend to the 261.8 percent level at $54.78."
However, the bullish outlook may break down, Wang said, if prices retreat to below $37.07.
"It seems the current sharp surge is due for a correction and a deep fall from here could trigger a bearish reversal if we break below $37."
Silver was one of the strongest performers of 2010 and has rallied by a third so far in 2011, to trade at a 31-year high of $41.93 on Monday.
"The super bull cycle appears to have started from a low at $3.53 in 1993, rising during the subsequent 15 years to the 2008 high at $21.24," Wang said.
"That can be labeled as wave "A", and the subsequent sharp drop to the 2008 low at $8.42 labeled as a wave "B"," he said, adding that prices could continue to rise toward $55.
"Wave "C" could take silver to $54.78, the 261.8 percent Fibonacci projection level of the 1993 low to 2008 high."
Elliott wave theorists try to predict market moves by recognizing repetitive patterns or waves on the chart.
Those waves form in almost all types of markets form stocks and foreign exchanges, to commodities and real estate.
Wang noted the current wave "C" is part of the "A-B-C" corrective wave cycle, which often travels much further than the wave "A", a phenomenon called extension.
"The projection of the extended wave "C" based on Fibonacci ratios takes the price of silver to $54.78, which is likely to happen before the end of the year," Wang said.
Waves basically fall into two types, the impulsive wave, which is typically composed of five waves marked in numbers, and the corrective wave which is essentially broken down into three waves labeled with letters.
Fibonacci sequences -- named after the Mediaeval mathematician Leonardo Fibonacci, who identified a sequence of numbers created by adding the previous two numbers -- form the basis of the golden ratio, and a method to predict future market moves.
Examples of the numbers are 3, 5, 8, 13 and so on until infinity. If two adjacent numbers are used to divide one with another, the ratios work out to be 0.618 or 1.618. The larger the pair of numbers, the closer the result to the golden ratio.
"The wave "C" has surpassed the 161.8 percent Fibonacci projection level at $37.07, based on the length of the wave "A", and it is highly likely for the uptrend to extend to the 261.8 percent level at $54.78."
However, the bullish outlook may break down, Wang said, if prices retreat to below $37.07.
"It seems the current sharp surge is due for a correction and a deep fall from here could trigger a bearish reversal if we break below $37."
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