Gold most definately broke down but silver didn't. The gold/silver ratio collapsed in silver's favor.
I don't know what to make of it. never seen this before. what do you guys think
If you will only look at the closing prices of gold and silver on Wednesday of last week and then two days later look at the closing prices as of Friday, you will see that gold and silver both fell about 5% during the two days. So the silver breakdown was just as serious as the gold breakdown.
Gold went from $1222 to $1162
Silver went from $19.47 to $18.50
Gold off $60 and silver off $.97, both off about 5%
from what I've read from my PM subscriptions I conclude the following.. Much of this you probably know.
1. silver is still "significantly" trailing gold in this upleg, both the metal and the miners.
2. This upleg is not over because silver usually surges late signaling the end of an intermediate cycle.
3. A temporary pullback in gold is necessary to rebalance sentiment before a nice spring surge.. gold stocks did not follow gold up like they usually do i.e. 3 or 4x.
conclusion. I've ligthened up in gold over the past several weeks but have selectively added to silver miners...SSRI, SA I thought were trailing a few weeks back..SLW is the best of them all.
If we get a decent gold correction next couple of weeks I'm adding more to both gold and silver miners.
Nothing to fear as I have no stops on miners, but I am expecting a correction since this runup since July has not taken a breather..
That's just MHO.. good luck..anyone else have good subscriptions that tell a similar or different stroy??
I'm keeping an equal portion of silver and gold miners this time. In 2008, I converted a bunch of KGC and AUY to SLW and PAAS expecting silver to outperform. Silver took off like a rocket and the silver miners failed, while KGC and AUY rocked the house. I'll never forget that and this time will not overweight on the silver stocks. I'm also buying some SLV in the 401k as I expect silver to fly but not sure on the silver miners after that horrendous performance in early 2008.
I appreciate the "think tank" group of comments.
Just some history: I bought into silver wheaton in 2004, and have grown the initial investment roughly 1000%. I swing/day trade for a living. I knew only the SLW ticker name and not the actual company name for the first year I held the shares, because my scans turn it up and said buy. I didn't care about the deep fundamentals. I'm not happy catching 50% of a move, or 70% of a move, I want 80% of each move, so I want to be as precise as possible getting out near tops and buying in near bottoms. I'm an engineer by education, so I love to analyze things and crunch numbers. Over the years I've developed a system of trading that trippled the salary I had when I worked as senior product manager in IT for several fortune 500 companies. Several on this board over the years have seen me pick bottoms and top prices intraday within pennies.
What I believe I observed yesterday was profoundly different than anything I've witnessed since the beginning of this bull market. Yes, sometimes gold leads silver, and sometimes silver leads gold; sometimes the G/S ratio corrects and at its best it was roughly 42 if memory serves me correctly, so it is out of whack.
The one inescapable "truth" is whenever gold has had a severe correction, silver was dragged with it; whenever silver has had a severe correction, gold was dragged with it downward.
That changed yesterday, at least at first glance.
I suggested, and a couple of you have similar thoughts, that "some" funds were heavy into gold (and nothing else) and when they fled, gold was ravaged, but silver and several other commodities held up.
The key to trading is having an advantage over everyone else. Now that we know that something has changed or is different its up to each of us who loves our money dearly to figure out what this means moving forward and to utilize it to our advantage.
I think at this point we should wait and see what Monday and Tuesday reveal with gold, the dollar, oil, and commodity indices.
Oh, one other thing, my girlfriend thinks I'm clueless half the time, she's 50% right.
I feel that silver will start to close on the ratio to gold. It has been suppressed since the hunt brothers in the 70's. If the silver experts are correct about silver being more scarce and in higher demand than gold, then we will a do well with silver!
Silver is also an industrial metal so a certain aspect of it will perform better with equities. It still has a long way to go up when the industrial demand returns and finds there isn't any silver available.
Obviously each silver stock moves independently of the others eventhough, generally, they all move in the same direction each day. But the leadership in terms of performance of each stock shifts from day to day. That's why it's often a good idea to be positioned in more than a single silver stock. Additionally, the current gold silver ratio is much higher than the historic norm. Therefore, we should expect silver to perform better than gold the majority of time until the ratio returns close to the historic norm. Relax, and try to take adbvantage of the price swings as they occur. I purchased some SLW stock today while the price was right. SS
If gold falls to $1050 then the gold stocks are in a world of trouble. They tend to fall far harder than that actual metal anyway. It took about 14 months for gold to reach the $1038 it reached in April of 2008. So if it falls near that price again, I would say the gold bull is over. At some point gold must show some real strength that is lasting.
As it is only the dollar is able to show any lasting strength. Oh it falls but then comes right back up.
This is completely confusing.
SSRI and PAAS all bounced back and don't look to have broken down.
Some of the larger gold miners broke down but the juniors gold's haven't, their behaving like the silver miners.
It seems the large money (hedge funds) that were attracted to the big name golds and were not in silver or the gold juniors, saw gold fall, and all the hedges ran like hell.
Since they were not in silver and the gold juniors, these stocks where spared.
I really don't know what it means, and I have a large chunk of change I could put to work right now.
I'm going to turn off my computer for fear..I make a dumb move.