Gold and Silver Soar Overnight

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Gold and Silver Soar Overnight

Posted on 09/25/2006 16:40:44 | Link | Post Comment

0920 EDT Tuesday July 11, 2006

Good Morning: Yesterday, we alluded to the fact that this week could define important trends in a number of markets for the remainder of July and well into August and possibly right into September and years end and this morning, we are greeted with sharply higher Gold and Silver prices along with Platinum, Palladium and Copper. This is very good unfolding news for Metals bulls as this action could lead the way towards substantially higher prices for the sector and along with this, the Energy complex also rebounded overnight although we are not yet at new highs there, but the possibility certainly exists. In another development overnight, Grain prices soared and now appear close to breaking out of a long consolidation, that could involve weather inspired sharply higher prices for this sector also. The fact that Sugar, Cocoa and Orange Juice have soared dramatically this year already, often a leading indicator of higher Metals prices, leaves only Coffee the odd man out and we think that won't be for much longer, along with a potentially soaring Grain sector, could add considerable impetus to the Metals sector, which is already responding to near record highs for the CRB Inflation index at 347, (1980's high was around 280), gives some idea of how potentially undervalued Gold and Silver remain 26 years later as the last remnants that still have not caught up with modern day price levels, a la housing probably up as much as 10 times in many instances along with everyday items such as the price of newspapers or admission to sporting events and the like and regular household items and foods, up by as much as five fold. The CRB index looks like it could be tracing out an upward running correction, a very powerful continuation pattern, which if it plays out, could send this index upwards towards 400 and that would likely power Gold and Silver and the rest of the Metals to new 26 year highs. Along with this, the fact remains that the ratio of Oil to Gold remains near historical lows and this apparently is prompting many Oil producing nations, especially Russia, to hedge their bets by buying increasing large amounts of Gold Bullion to boost their reserves. Based on this ratio Gold should be around $1,000 per ounce today and Oil at $85 could project Gold prices at upwards of $1,245. In any case from a technical standpoint, the overnight moves up in the Metals sector do appear to a welcome development as it opens the way to higher prices. Meanwhile, the Equity markets which opened the weak on a sullen note could at a stretch actually rebound sometime this week and maybe even today. Failure to do so would not be good, but there if the Nasdaq can perhaps reverse, it could inspire a decent rally.

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