falling, page-8

The downside risks in the near-term must be considered against the wonderful opportunity for upside in the medium to long term.

The downtrend in the CCU SP is yet to clearly bottom and the business plan for mine development costs is yet to surface. Both factors suggest some downside to come.

However, I'd like to post something heartwarming from the point of the POS. I'll be buying some more physical next week or two.

Of interest is the graph of the POS in USD.

http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=10y&c=csilver.xusd.uoz#chart

There are 3 phenomena worthy of comment. I'd love to hear some viewpoints here.

1. The blindingly obvious - the POS trough ended about 2003 in both currencies, with a solid uptrend since then.

2. A repeating pattern most evident in the USD POS. Spikes (each of which nearly or actually "doubles" the price) and then consolidation. See the similarity between what is happening now and events preceding the last spike...

Look at the graph carefully..

Prior to the last spike we see a series of small see-sawing actions upwards, a top, then a small see-saw downwards before a massive spike from USD $13 to $22. (nearly doubling the price, similar to the other spikes).

Now, look at the present situation, following on from that last spike. A series of see-sawing on an uptrend, hitting resistance near the price at the last top. Could this be a repeat?

If it does, we are going to see a double or near double this year or at worst very early next year (from a low of about $15-16 USD).

It will be interesting to follow the POS over the coming months, to see if there a "rhyming" replay, more or less, of this series of spikes.

If so, we could anticipate possibly zero to two further attempts to push through resistance at a little above $22 USD (last top), then failure leading to a brief sideways and modest downtrend, see sawing down to around $15-16 USD, perhaps briefly dipping just below that before the slingshot up.

If it replicates the last spike up in magnitude, we could expect to see a price of about $29 USD (a near double).

3. Next thing to consider is whether this pattern we see is an inverse head & shoulders, like the one we saw in 2008 with gold, which saw the POG fly upwards from $900 to $1200 after completion of the H&S formation.


Here is the POG & POS on the same chart over 10 years in USD. H&S clearly seen in gold in green and also looks good to go in silver in red.

http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=10y&c=csilver.xusd.uoz,cgold.xusd.uoz#chart

It is a very interesting prospect, because if what we see is an H&S formation in the POS, it is practically completed!

That means not far from here, at least from that viewpoint, we could be in for our next double. That would be an excellent time for CCU to seek finance to mine the shiny. We could see a solid acceleration up within the next several months to six months.

You could well imagine what effect a near or actual doubling of the POS is going to do for us CCU holders, all being equal.

These are just speculations on my behalf btw. Contrary interpretations/speculations most welcome. :)

Although I risk losing out by waiting for my price target of 12-13 cents for CCU (I may average in higher than that), we are looking good for the medium to long term (potential for price double this year or at worst next year if the uptrend follows suit from the last spike).

Again, just my 2 cents. Thoughts, anyone?