Gold Editorials & Commentary

There is a pattern that just jumps out at us, which we want to present as our new highest probability scenario for the big picture.

Let's start off today with an old classic by Olivia Newton John, "Let's Get Physical." Cheesy? Absolutely. But, as it applies to the precious metals market, it's what you really want to do.

GLD - on sell signal.

Sources

Futures contracts are a market solution designed to hedge tomorrow's uncertainties; the risk of unforeseen future events ruining the best laid plans of today.

In a single week, the manic euphoria gripping silver recently was utterly obliterated. After promising such rapid wealth creation, this metal collapsed in what can only be described as a near-crash.

GLD - on sell signal.

It was a week like we haven't seen since the beginning of the crash in early 2008, but this time it was mostly in the commodity sector.

Silver was one of the top priorities for many of precious metal traders until last week. However, silver market witnessed a dramatic turbulence in recent days. Let's examine what has happened in silver market, in detail.

The beleaguered US dollar has certainly challenged silver's crown of being the most-one-sided trade lately.

The past few weeks we have been seeing the US Dollar slide to new lows at an increasing rate. The strong devaluation of the dollar has sent precious metals like silver and gold rocketing higher out of control sending them parabolic!

Silver has posted an incredible first four months of the year, appreciating by over 60%! But we all know the adage that nothing goes up forever and silver proved it true by finally hitting a wall and correcting by 15% in just three days.

The interesting thing about gold is that although it has been in a steady long-term uptrend there has still been no meltup, such as we have seen in silver, but if the dollar really caves in that could very well happen - and such a meltup may have just started t

GLD - on buy signal.

Last week, Barron's reported record earnings for the Dow Jones: $850.91. But just 2.5 years ago in August 2008, Barron's reported record low earnings for the Dow: -$109.43.

We are entering the six-month period of negative seasonality from May 1 through October 30, which will present a headwind to the market's current rising trend.

{This update to an editorial I wrote on 02-10-11 was provided to subscribers on our website over the last couple of weeks and is provided in limited scope with updated charts. The link to the original article follows.}

Several very important currency effects are at work. Most economists are either silent on the factors or wrong footed on the dynamics.

Explanation

When gold hit the psychologically important $1,500 level it didn't surprise us, but we admit that silver's recent performance gave us a small thrill.

Having just written a commentary explaining why gold and/or silver "mania" is much more of an imminent event in Asia than in the West, when I saw silver leap more than $2/oz in early, Asian trading on Monday that definitely got my attention.

It was another wild week as silver roared and gold held its own as well. The US markets were even wilder as they bucked and jumped after news of a US receiving a forecast downgraded from a prominent ratings agency.

The chart below is a picture of the silver market........ now read it's story.

Back on March 31st I wrote an editorial showing that Silver could rocket up to $52 to $56 by mid-year. At the time of the writing Silver was sitting a little above $32 on the price chart.

I like this chart of the Dow Jones. BEV points to the left, Dow points to the right. Note how both views of the Dow, one in percentage points from the Dow's Terminal Zero (last all-time high), the other in dollars, exactly overlay each other.

The chart below is a picture of the silver market........ now read it's story.

GLD - on buy signal.

In just a couple months, the US Federal Reserve's second quantitative-easing campaign will wind down. This program has been highly controversial since its birth, so the Fed is under tremendous pressure not to launch a third round of QE.

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