NEW YORK ( TheGoldAndOilGuy.com) -- The precious metals sector has been dormant since both gold and silver topped in 2011. But the long-term bull market remains intact.As long as we do not have the price of gold close below the lower yellow box on the monthly chart, then technical speaking precious metals should continue much higher. Large consolidation periods (yellow boxes) provide investors with great insight for investments looking forward six to 18 months upon a breakout in either direction (up or down). The issue with investing during these times is the passage of time. One can hold a position for months and sometimes years having their investments fluctuate adding extra stress to their life when they really do not need to. Once a breakout takes place, a powerful rally or decline will start putting an investor's money to work within days of committing to that particular investment compared to money invested waiting months for the breakout and new capital gains to occur.
If this chart plays out to what technical analysis is pointing to then we could see the precious metals sector put in a bottom and rally within the next week or two. If this is the case then silver-miner stocks should provide the most opportunity going forward.
Precious Metals Trading Conclusion: In short, what you need to focus on is the yellow consolidation box on the monthly gold chart. A breaking in either direction will trigger a massive move that should last six to 18 months. Until then long-term investors can simply sit back and watch the sector while they put their money to work in other active sectors. From a short-term traders point of view, I am looking for a signs of a bottom on the daily chart to get my money working earlier to play the bounce/rally that takes place, and actively managing the position until a breakout occurs. The charts overall are not that clear as to when a breakout will take place. Metals could start to rally next week or in a few months and all we can do is wait for a reversal to the upside before we get active. Knowing the big picture trends and patterns at play along with major support and resistance levels (breakout levels) is crucial for success and piece of mind. This article was written by an independent contributor, separate from TheStreet's regular news coverage.