Silver Outshines Gold: A Buy Signal
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In a previous article I showed that a modified Coppock indicator could identify good investment periods for silver. This indicator has now generated a buy signal.
The chart below, taken from our weekly model update series, shows the silver price from 2005 to 2013, the modified Coppock indicator (blue graph), the buy signals (vertical black lines), and the model's investment periods in silver (gray shaded periods).
The Coppock for silver generated a buy signal on Friday April 12, 2013, exactly 2 years after the sell signal. The buy signal is based on Friday's morning London silver price fix of $27.40, but the actual investment is made the following Monday according to the model's rules. The model is now going to be invested in silver until it gains 67% or 88 weeks, whatever occurs first. If another buy signal appears before any of this happens it will be longer invested in silver. The model cannot turn negative, because the Coppock indicator only produces buy signals. The two parameters for the investment period have been determined by optimizing the model.
Georg Vrba is a professional engineer who has been a consulting engineer for many years. In his opinion, mathematical models provide better guidance to market direction than financial "experts." He has developed financial models for the stock market, the bond market, yield curve, gold, silver and recession prediction, all published in Advisor Perspectives. The models are updated weekly at http://imarketsignals.com/.