Archive for category Silver and Gold

Dow to Gold Ratio

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The Dow to Gold Ratio has broken down to 6 (Aug 20 2011).

We are entering the last – most likely euphoric – phase.  When the ratio reaches 3 to 1, there will be sign of a major trend change.

Gold Nationalization in Venezuela

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This News report appeared today with a clear indication of the importance of Gold. 

Chavez Orders Gold Repatriation, Will Nationalize Industry

August 17, 2011, 6:35 PM EDT

Aug. 17 (Bloomberg) — Venezuelan President Hugo Chavez ordered his government to repatriate $11 billion in gold held in banks abroad to safeguard the country from the economic crisis and said he’ll nationalize the local gold industry.

Venezuela has about 211 tons of its 365 tons of gold reserves held abroad at institutions including the Bank of England, JPMorgan Chase & Co., Barclays Plc, Standard Chartered Plc and the Bank of Nova Scotia, according to a government document.

“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said today on state television. “It’s a healthy decision.”

Chavez, who has said he wants to eliminate the “dictatorship” of the U.S. dollar, has called on Venezuela’s central bank to diversify its $28.7 billion in reserves away from U.S. institutions. Some cash reserves, which total $6.3 billion, will be shifted into currencies from emerging markets including China, Russia, Brazil and India, central bank President Nelson Merentes said today at a news conference.

Silver Update Aug 16

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Silver hit a recent high of 41 on the SLV ETF and over 42 on the Silver futures.  It is in a new up cycle after an slight oversold condition.  Monitor for new highs above 41 in SLV and 42 in Silver futures.

Gold is significantly Overbought with acceleration of prices after August 1.  Now forming a possible double top unless prices accelerate significantly past 1805.

Gold Update

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Today Gold reached 1805 breaking all records.  We are monitoring the situation since with the recent move 1) Gold has entered into a somewhat parabolic move in the Daily charts #2 There is already intervention from the Chicago Merchantile Exchange (CME) to lower the leverage margin for Gold future purchases by 22% as of this writing.

We will use the action on Gold to signify a “run for safety” due to the current worldwide fear over various country-wide economies including Spain, Italy and now France and the all mighty United States.

Here included are the charts from August 4, 8 and 11 where you can see the price action developing to today’s high above 1800.  (as of this writing prices have moderatly come down below 1800).

August 8th is:

And August 11th

Silver and Gold Update Post Debt Ceiling Debate

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Economic news including weakness in Italy and Spain along with USA Debt Ceiling negatively received theater has contributed to an equity market turmoil.  We see silver prices with chart noise (making them more difficult to interpretet in an intraday basis) and gold to be more trending.

In addition, Silver has received several brokerage de-leveraging changes.  Yesterday several futures brokerages reduced margin leverage on silver.  That coupled with weakening of an already anemic US and European economy reduced the industrial demand outlook in Silver.  However, Gold action reflect a continuing flight to safety scenario with trending prices.

Nevertheless, it does not change the fundamentals for buying and holding both.

Here is the weekly chart showing a clear resumption of uptrend after the April dropped caused by the Future Exchange reduction in leverage that precipitated the major silver drop.  Since July 1 we have a long term buy signal nevertheless prices have gotten a bit ahead of the median which is 37.

Prices on the daily rest on the EMA34 for support.  If prices go below 38.75, there would be more weakening.  (nevertheless any major weakness would be good opportunity to buy the dip).

Here is the 60 minute action which shows yesterday move released energy from an overbought condition.

To complete the picture, here is the macro view of Equities which precipitated currency intervention in Swiss Francs and Japanese Yen.

Silver in a Buying Zone

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Since Silver major drop April 29 2011, prices settled between the lowest 32 to 40, now.

STO shows a oversold condition and prices have stabilized not without further dips.

Equity at a Crossroad 2009-2011

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This graph shows rather clearly that equity prices are in a narrowing consolidation over the last few months.  A major move is expected but not without an initial fake move.

It is expected that Dividend Yields will be increasing on decreasing P/E Valuations.

Gold and Silver remain the main asset for long term holding merit buying on the dip.  Dip points for Gold was Feb 2010 and 2011.

Silver is in a dip zone at the moment.

Ever since Silver major drop from April 29 2011 where prices drop from 50.0 to 32 (an over 35% drop from the top), Silver is in the oversold territory.

Gold & Silver Update July 26 2011

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Gold at 1620 and Silver at 40.

and Silver following Gold at slower pace for now.

Silver RSI is not near overbought.

Catalyst is the USA Debt Ceiling debate and news about the 1st Debt Default by the USA in modern history.

Behind scenes, US Dollar also continues downtrend.

Silver Update July 11 2011

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Weekly is oversold.  BUY OPPORTUNITY.  Prices have been on an uptrend since 6/28/2011.  Wait for pullback to add position.

Daily in overbought territory and 240 mins is in clear overbought territory.

From the low of October 2008 (prices at 8.45) to April 2010 at 50 the gain was 6x in 18 months.  After the April correction lowest prices was 32 and now in July prices are in a range from 35-36.

The Gold/Silver Ratio is 43 on July 11 2011.  In 2008, Gold/Silver was 83. The average low on the ratio has been in the 50’s.

More distant in historical terms, in 1990 it reached a peak value of 100 which is similar to the 1945 peak which is also in the 100 range. On the low side, in the 1970, it recorded a low in the 20’s (22-23).

Prior to 1920, the gold/silver ratio was below 20 with a low in 1865.  However, since 1900’s electricity was deployed and silver’s industrial usage increased.  Silver in 1950 was $0.75/oz.

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