M I S Q S

Ok so Silver dropped to $34 before buyers re-entered the market.  Alot of the fall has to do with the increase in margin requirements for those buying on margin.  Four weeks ago or so it cost $11,400 to buy 5,000 ounces of Silver on margin today it cost just over $27,000 to buy the same Silver on margin. (Basically you were able to control $200,000 worth of Silver for around6% down payment now it cost closer to 12-13%).

Silver came back above $36 and in fact made it back to the $38.45 area.  Today Gold and Silver are falling again with Silver at $35.35 down $3.10 Gold is down $19.20 to $1496.90.

We need Gold to hold above $1490 and Silver to hold above $34.00  Otherwise, we are looking at the potential for another 20% decline in both metals (Gold to $1200 and Silver to $26).  However, let me restate once again that as long as Gold remains above $1350-$1360 the primary bull market is intact, therefore a decline to $1200 could indicate a collapse of Gold's foundation.  Silver on the other hand can fall to $22.50 before suspecting a collapse in bull market fundamentals.  If Gold breaks below $1350 and heads to $1200 I would suspect that Silver would remain around $24 or higher (which is a 50:1 ratio versus the current 42:1 ratio).

Speaking of Ratios we saw the ratio fall as low as 30:1 and has now moved back up to over 40:1.  Over the past 10 years the Ratio has been in the area of 60:1-80:1 with the average of 70:1 being maintained.  For Silver to move back to this Ratio we would see it fall to $17.50 area with Gold at $1200.  Would this be a Bear market for these metals?  Don't know because the primary reason to be in Gold and Silver right now has not gone away or gotten better.  Inflation is still headed this way, the Fed keeps pouring $$$ into our economy, a weaker dollar is inevitable (even with European nations having debt problems).

I wonder, guess I will need to investigate, what is America's debt compared to Greece, Spain, Portugal, Italy and Ireland?  Are they combined anywhere near America's problem or are they only a drop in the bucket.

Anyway, all I got time for today.

Standard Disclaimer applies