For the past two weeks, we have been bullish with the mining sector and with good reason.  The first reason is that gold has still been continuing to go to higher levels and we are still expecting this precious metal to land somewhere between $1200 – $1300/oz. soon.  We see two more reasons to be bullish.

Silver

Check out the 5 year chart of silver.  Sometime in the 2nd quarter of 2006 up to the 3rd quarter of 2007, it has produced an ascending triangle that pushed this commodity to higher levels; specifically from $14 to $20, within a span of 4 months on breakout of the pattern.  After making a high at around $21, silver has descended from there, to the low of around $9 near the end of 2008 and bouncing back to its current level of $18.  On the big picture, silver is looking to create a continuous inverted head and shoulder, where the right shoulder is still being created now.  At the same time, when we examine the right shoulder, it is in itself another continuous inverted head & shoulders in the making where the head has already been completed. But we’re still waiting for the right shoulder to form.

When this breaks the neckline at around $19, you can bet that silver can go to new 5 year highs of around $30 or more.  The other indicators are confirming the current bullish state of silver.  So this is reason number 2 to be bullish about local mining stocks.

Nickel

Here we see the 5 year chart of nickel where after reaching a high back in the 3rd quarter of 2007 of around $24/lb., nickel has dropped to lows of under $4/lb.  But after that, it has been able to bring itself to higher levels and has in fact create a bullish cup & handle formation from the 4th quarter of 2008 to the start of this year.  It has already broken out from that pattern during the first quarter of 2010 and still looks to move even higher, to an upside target of around $15/lb.  It is currently at just over $11/lb.

This is our reason number 3 for being bullish on the mining industry. Three of the more precious metals being traded in the commodities market have been showing signs of bullishness for quite some time.

But which of the mining stocks in the PSE are we really bullish about since there are quite a few listed?

You’ve already read it before and we are reiterating our bullish sentiment for ORE.

If you have been following ORE since the time we gave our recommendation, you would know that it has been resilient to the panic selling the other week, and has maintained its composure and it looks ripe to fly this coming week.

We’ve already shown you the cup & handle formation from before, but if you haven’t noticed it, a symmetrical triangle has already formed acting as the handle.  Add to that, a pennant has also formed at the end of the triangle to set itself up to breakout of this pattern.

Concentrating on the triangle alone, we foresee that it will break the resistance of 1.96 and go for an upside of 2.55.  Expect this to meet some resistance around 2.02 as this was the previous high and many who were stuck at this level would be selling.

Now, if you feel very bullish about ORE and are not satisfied with just the target of the triangle, then you could still hold on to ORE and wait for it to reach the target of the cup at around 3.70, but this will take a while.

Whatever your poison, be glad that something is still giving you the opportunity to make money as most have already flown or have already retraced.  It’s now just a question of how long your patience will go.