Gold explodes; silver charging higher

London (Feb 21)  The metals continue to charge higher, with gold in a blow-off pattern with parabolic moves on heavy volume. Although we have been bullish for an extended period, the pattern itself suggests a pullback is near. There is no reason to sell here; however, we wouldn’t be chasing gold higher with new money.

Silver, on which we had been bearish until the other day, has been riding along with gold. Our expectations are for a pullback in silver, which will create a buying opportunity. One negative in the silver pattern is it failed to reach the Jan. 8 panic high. Although we have turned bullish, we are waiting for a support level to buy.

The bottom line in both gold and silver is that they need to see some profit-taking if this is going to be a long-term bull market. All the pieces are in place for the rally to continue, but the healthiest action from here would be a pullback to support. We are bullish on gold and silver.

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