"Mission control, we have ignition!"
Following Tuesday's convincing breakout to fresh highs by both gold and silver, a strongly supportive technical environment provided the spark to ignite the fuel for gold and silver.
Everything that is required to lift gold and silver prices into the parabolic rise that I've predicted is already in place. All systems are "go," including:
- Overdue recognition of the fact that gold is a currency: check.
- Heavily impaired and deteriorating condition of major reserve currencies: check.
- Expanding Western sovereign debt amid stagnant economic conditions: check.
- Unwaveringly accommodative fiscal policy for an extended period of time: check.
- Explicit, official support for gold from China: check.
- Seasonal strength in demand from India: check.
- Robust and increasing global demand, including that from central banks: check.
- Growing public scrutiny of oddities within the global bullion markets: check.
After striking a new all-time high of $1,271.25 intraday, gold managed to close above its previous record in a glittering show of force. Not to be outdone, silver continued to gleam with a long-awaited push beyond its prior 21st-century high to finish near $20.50 per ounce.
Familiar efforts by market commentators to identify a single proximal cause, in this case German economic data, are yet again ill-founded. Booster rockets have been strapped to these metals for years now, waiting for the marketplace to recognize the enormity of a financial upheaval even while it is under way.
I have repeatedly advocated some exposure to precious metals and related mining stocks to my readers for several years running, and I am pleased that some have discovered the tremendous growth potential of well-selected equities during a trend of this magnitude. Whether Fools elect to ride my favorite rocket Silver Wheaton (NYSE: SLW ) to my long-term target price of $100 per share, or consider a promising future producer like Alexco Resource (AMEX: AXU ) , I continue to believe that silver equities as a whole are in a position to outperform their golden brethren over the coming years.
Pan American Silver (Nasdaq: PAAS ) has earned this Fool's praise as an oddly persistent value proposition -- like a silvery counterpart to Yamana Gold (NYSE: AUY ) -- and on this auspicious day the stock finally gained some traction with a 6% surge.
Silver Standard Resources (Nasdaq: SSRI ) notched a healthy 6% climb Tuesday as well. After this week's preliminary assessment, which evaluated the Snowfield and Brucejack deposits as a massive combined project with a 27-year mine life, it's not hard to see why Silver Standard is steadily building an audience. All the same, I believe there are safer plays in the silver universe, including ultra-low-cost producers Hecla Mining (NYSE: HL ) and Silvercorp Metals (NYSE: SVM ) .
As this latest technical breakout progresses into a potentially parabolic move, I view silver as a golden ticket to capital appreciation in an era when few such opportunities exist.