It has been a while since I last posted anything thanks to a very busy summer. Therefore, this post will highlight several updates all at once.
The Silver Lining in the Gold (and other precious metals market)
Gold is making a new all-time highs at 1580's with Silver trading around $38 the Gold/Silver ratio is currently between 41-42 up from 32 when Silver was hitting recent highs at $49 before crashing back to $33-34. Gold had been setting up a good base between $1480 and $1550 before this breakout to the upside. I would look for topping action around the Psychological barrier of $1600 but would not be surprised if we see a run up just above $1600 (say to $1610-$1620) before a fall back before we start the annual Fall run in the metals market.
Silver should maintain a 35-45:1 ratio with Gold which would lead us to see Silver remain in a trading range between $35-$45. I would expect Silver will top out just over $40 (maybe as high as $42-$43) before settling back to $36.
HOWEVER, If the US Fed increases it's interventions in the markets and/or the EU Contagion continues to grow then all bets are off as I see Gold running for $2000 and Silver headed for $50.
The Fed will continue to intervene in the markets by rolling over the short term Treasuries it bought during QE1 and QE2 into new Treasuries. They have to as there are no other buyers really in the markets. Thus you could say a pseudo-QE3 is already working. My "HOWEVER" statement above is that the Fed increases it's interventions above and beyond the rolling over of short-term/near-term maturity instruments into new ones.
Mother
Standard Disclaimer applies