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  • lancekoliver lancekoliver Sep 7, 2011 9:06 AM Flag

    currency war's

    Chem, good to see you back. Here's a slightly different explanation. Tell me what I'm missing.

    The EUR strengthened vs. CHF as expected, but EUR weakened against the USD because people want out of the EUR with German court rulings pending, Greeks and Italians waffling on austerity agreements, Germans and Finns grumbling about bailouts, etc., etc. While the dollar may not be the safe haven it once was, it may be the least-bad currency in a lousy currency neighborhood. As bad as the U.S. may be, it is better than Europe right now. And I do mean, for now.

    I don't expect that to last, and long-term I expect PMs to rise. Still, I sold 2/3 of my AGQ yesterday and will hope to buy back at a better price.

    I would be interested in your thoughts on the gold/silver ratio and whether you think they will go up in tandem or diverge under the scenarios you and I are describing, since we both expect them to rise. I have been mostly dabbling in silver, but I'm thinking gold may be a cleaner play under the circumstances we expect. TIA, as always.

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    • Hey Lance,

      Per the view that you looked at, ie over the duration of the day, your observation is sound.

      I was looking at a bit different view, trying to understand exactly what was happening as the bell wrung on the the Swiss news.

      At 2:00 am yesterday the Euro rocketed (ie EUR/USD cross rose), the dollar tanked, and gold tanked.

      That was the trigger that technically set the tone on the rest of the day.

      Later as the day progressed, the Euro tanked, the dollar rose and gold continued down.

      That 2:00am bushwack of gold was the unusual thing based on what the currencies did. With the US dollar falling, people went to the Euro instead of gold? huh? am I missing something. I think the govt's shut gold down at 2 am because govt can't have gold best their paper money.

      Whereas the currencies changed course later in the day, gold continued down.

      I think you're right on gold being the better play based solely on looking at the Au:Ag ratio. The ratio just broke above the 200 day moving average a month ago and looks to be basing for an upward move. a lot of indicators seem to confirm this except a few.

      Silver currently is within a very large bull pattern. 43.37 is the impediment price toward 47.95.

      I have trouble believing that gold and silver can be taken down here, and for the last several days silver showed strength relative to gold that was very encouraging despite the ratio. I feel I might be letting my emotions get in the way though.

 
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