The Precious Metals Market Today
Regarding the precious metals market today: Following Monday’s big rally, Tuesday gave us a quiet morning as the market digested the gains and drifted lower. After a few probes lower, gold found very good buying interest and took silver along for the ride as it began chipping away at $1,350.00. Tomorrow is option expiration day on the COMEX; this can either bring us quiet trading, as prices stay pinned close to the current strike prices which have the largest open interest, or it can bring us extreme volatility if we move above or below those same strike levels.
In the case of gold, volatility is likely to be greatest if we break above $1,350.00 where the next stop could be $1,385.00. In the case of silver, which has not rallied to the same extent gold has recently, volatility is likely to be greatest on the downside where a break below $20.00 could have us retesting $19.50 through $19.25.
Speaking about silver not following gold, continue to keep a close eye on the gold / silver ratio which is now trading above 66. I began suggesting a swap from gold into silver at 58:1. At the 66 level, savvy investors have historically, and are increasingly, swapping long gold positions into silver. With the bottom appearing to be in at least for the time being, the 100-day moving average in gold at $1,422.50 and $23.55 in silver present a good medium term target for the bulls.
All Things Considered – John’s Commentary:
Continue to accumulate at these levels in modest amounts. Overweight in silver.
Strongly consider swapping some of your physical gold into silver. We have swapped five times in the last twelve years, all for profits of 25% or more. Call for more information if you are interested.
