Wednesday, February 23, 2011

Questions about the end of correction.




We are used to silver and sold moving together. Looking at the silver prices in the top graph, we see that silver broke out of its reverse head and shoulder and set new, record prices. When we look at the gold prices, however, (second graph), we see that gold price failed to reach the pre-correction price and in fact slipped yesterday. The gold miner index (GDX, third graph) tells us the same thing.
Uncommon Wisdom (which uses the Cycle Theory to predict moves) tells us that this is not the rally that will take gold over $2000/oz. In fact, they predict that the correction will take gold much lower (1,250 - the second Fibonacci) and Silver to 22.
What we can see is that silver has become a stronger market than gold. Will the softness in the DJI signal a softness in the stocks? Will that take down gold and silver as everyone rushes into cash? The next two weeks should tell.



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