Gold May Top $6,000, Silver $600: Asset Manager

www.cnbc.com

Gold prices may reach $6,200 per ounce in a bull run which will "end all major bull markets," Urs Gmuer, asset manager at Dolefin, a Swiss investment advice firm, told CNBC.

Gmuer's prediction is based on analysis of the last major gold boom of the 1970s, during which gold prices rose from $35 per ounce to $850 per ounce. Gmuer said that in the current bull run, prices would be pushed upwards by a protracted period of global economic difficulty--potentially lasting years--during which investors would continue to search for so-called safe havens.

"Gold prices have risen over the last few years, as the macroeconomic picture has become worse. The deterioration of the fundamental situation has now gone even further.

"Purchases by investors of gold will be based on fears of systemic risk or banking crashes," Gmuer said.

The investment manager said that as no "safe" currencies remain, cautious investors had no choice but to opt for precious metals.

"The ultimate currency, which has stood the test of time, which has no political support behind it, is gold. Nobody can print gold out of a machine or a PC.

"What the Swiss National Bank did two-and-a-half weeks ago, increasing the supply of the Swiss franc, means the safe currencies are all gone. That is why gold will have a revival," he said.

Gmuer said the precious metal had entered a "super-cycle," which he likened to the 1998-to-2000 boom in technology media and telecommunications.

He added, "This bull trend will end all the other major bull markets," and singled out debt capital as an asset class for which demand and prices would decline.

However, Gmuer denied that high and rising gold prices could be indicative of a bubble. "If everybody is saying a particular asset is a bubble, that reflects the fact that most people have disposed of it," he said.

Other calculations indicate that gold prices could peak at $3,500 or $4,000 per ounce. This is based on historical data regarding the long-term ratio of gold prices to the global money supply.

On Sept. 2, gold peaked at $1884.60.

Silver Set for 14-Fold Price Rise?

In addition, Gmuer said silver is set for an even greater upward run than gold, with the market due to correct a distortion in its pricing of silver in relation to gold.

Gold and silver currently price at a ratio of around 45:1. However, Gmuer said declining silver output over the last 60 years--as a result of inventory depletion and mine closures--meant silver supplies currently outnumber gold by a ratio of less than 10:1, thus indicating a market correction is due.

Once this occurs, Gmuer said silver prices would settle at 6.7 percent to 10 percent of gold prices. This implies that if gold reaches $6,200 per ounce, silver could peak at $620 per ounce.

On Sept. 2, silver peaked at $43.24.

Gmuer added that markets for all precious metals were benefiting from the surge in demand for commodities, food, and energy from developing countries.

"Since World War II, the world population has almost quadrupled. However, most of the increase was in countries that had closed political systems, such as the Soviet Union, China and India," he said. "When these countries started to open up in the 1990s, these people saw they could increase their level of well-being. It is pent-up demand."

Heads up! Gold futures margin could be raised again

In a couple of moves the CME Group recently raised the margin for trading gold futures from 4,500 to 7,000 dollars. The move came as a response to increased volatility after an unprecedented strong rally during the last couple of months. The exchange is not trying to dictate the direction but in order to keep some integrity in the market they had to respond to the increased intraday volatility.

Have they done enough? Probably not, as volatility is still trading at almost twice the level compared with the first six months of 2011 and average daily price swings have continued to rise since the last margin increase  on August 24.

Gold margin as a  percentage of the contract value is still relatively low. Over the last two years margin requirements have hovered between 2.5% and 5.25% with 3.8% currently. 

As an example the equivalent for silver was more than doubled earlier this year 

How much:
Another rise could bring the margin up to somewhere between 8,200 and 9,000 dollars from the current level of 7,000 dollars representing an increase of between 17 and 28 percent.

Impact:
The previous two increases partly help to bring about the 200+ dollar correction and has so far not reduced intraday volatility.  Speculative involvement from hedge funds has been reduced over the last three weeks as margin increases make an impact on the position size they are allowed to hold.

With the increased potential for another round of stimulus from the Federal Reserve gold should be supported at this stage but as the recent correction highlights nothing ever goes in a straight line and discipline remains the key.

Silver Picking Up Momentum, but Will it Surpass the $40 Level?

The price of silver finally began correcting its impulsive rally that started on Tuesday from the $34.77 level to reach a high of $39.34 on Thursday. With the key $40.00 psychological level providing formidable resistance, the metal sold off sharply and began consolidating in the $38.12 to $38.60 region.

Thursday’s corrective sell off in silver was in part due to a report that Mexican producer Fresnillo was looking to double production through a newly opened mine in Saucito, Zacatecas. The mine was recently inaugurated by Mexican President Felipe Calderon and is forecast to produce 283 tonnes of silver, with 133 tonnes of silver production expected in its first year alone.

Nevertheless, the broader recent rally in silver has come in response to increased risk aversion that has also led to the price of gold making new all time highs. Since precious metals traders focus on the same fundamental factors, both markets have seen increasing demand as traders prefer the long side in the wake of U.S. debt rating downgrade warnings by both the Moody’s and S&P rating agencies.

Additional factors boosting demand for silver include the ongoing and spreading European debt crisis, as well as recent indications by the U.S. Federal Reserve Chairman Ben Bernanke in testimony on Wednesday of the possibility of renewed stimulus measures for the U.S. economy.

These fundamental influences have weakened the U.S. Dollar against other major currencies and have also strengthened the somewhat wary silver market considerably and sent gold into uncharted territory.

Despite the corrective price action to the downside seen on Thursday, it seems that the price of silver has finally begun to stage a tentative recovery after the severe routing the metal market experienced during late April through early May.

Since taking that beating, the silver market had seen prices consolidating at lower levels above the $32.31 mark, although the latest impulsive rally over the last few days seems to have broken this pattern to the upside as the market traded above resistance at $38.83. Key resistance at the $40.00 level now represents the level to surpass for additional upside in silver, with $41.95 and $49.78 seen as further resistance levels above that.

By Barbara Zigah

Closing Gold & Silver Market Report

MOODY’S PLACES U.S. BOND RATING ON REVIEW – Citing the “rising possibility” that political leaders in the U.S. won’t come to an agreement on raising the debt limit, Moody’s Investors Service has placed the AAA bond rating currently held by the U.S. on review for a possible downgrade. At the same time, discussions between GOP leaders and President Obama on raising the debt limit continued to go nowhere today, with Republicans still refusing to consider any anything related to revenue increases and Democrats withholding any further cuts in spending in response. Some investors and analysts are worrying that certain members of Congress might prefer to let a U.S. debt default take place rather than face the heat from angry constituents.

In an appearance before Congress today, Federal Reserve Chairman Ben Bernanke indicated that additional monetary easing may be on the horizon, saying that a new stimulus program with additional asset purchases is already being planned. In prepared remarks, the Chairman stated that the growth of the economy is slower than expected, and that if that slow growth continues, “…the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate." Reacting to the news, the price of gold rose climbed to a record high of $1,584.39 per ounce before ending the day at $1,584.00 per ounce, with both stocks and Treasury yields increasing too.

The federal budget deficit for June came in at $43.1 billion, with the year-to-date budget deficit at $970.5 billion. Experts predict that deficit is set to exceed the $1 trillion mark for the third year in the row. Meanwhile, a recent poll by Reuters shows that 63% of Americans feel the country is headed in the wrong direction, with concern centered on unemployment and the government’s efforts to raise the U.S. debt limit.

Silver May Nearly Double by Labor Day

My Favorite Silver Trading

Silver May Nearly Double by Labor Day
By Greg McCoach

As we expected, the price of silver is rapidly recovering after the brutal correction we experienced earlier this month.

And now, the next phase of the silver bull market looks like it will open with a healthy bang, taking prices much higher.

I'll detail for you one of my favorite silver trades — one that I've personally made money with at least a dozen times in the past year.

After shedding some 31% of its value, the price of silver has bounced off its monthly low of about $33.50 an ounce.

This morning, silver prices opened around $37.50 an ounce.

 

This month's silver sell-off puzzled many investors, especially those who truly understand the intrinsic value of the white metal and have a clear perception of its supply/demand fundamentals.

But the fact is silver was ripe for profit taking after swiftly moving from $30 to $50 an ounce in a matter of weeks.

No market goes up in a straight line, and we were due for consolidation at some point...

Nevertheless, I believe we'll see the price of silver steadily rise throughout the rest of the year, with moderate corrections along the way.

The upward volatility will become greater as more and more investors and institutional funds wake up to the fact that they need to diversify away from the depreciating dollar.

Overall, I expect the silver prices to be closing back in the $50 level over the next few weeks as the dollar continues to wane in value. After that, I believe silver could even hit $70 an ounce by Labor Day.

World Silver Demand Facts

Investment demand for silver has skyrocketed 522% since 2007. World governments are hoarding silver; official sales have plummeted 83% in the past three years. Above-ground silver supplies dropped 86% last year. Industrial demand for silver has increased over the past decade, despite a 236% increase in prices.

Investment demand will remain key to silver's price. Higher demand will be required from investors because silver's supply/demand fundamentals are expected to deteriorate, with an expected surge in mine production and lower fabrication demand.

And as gold prices approach $2,000 an ounce, I believe silver will be preferred by many — if not most — retail customers as a cheaper alternative that provides the level of wealth protection investors might be looking for.

Gold is moving up against all currencies worldwide. And while some may flee the dollar to go into the euro or some other fiat currency for a time, most will eventually come to both gold and silver as the only true safe haven for their savings.

Add on top of all these events the next wave of derivative problems that are soon to hit the market, and we have the making of the perfect financial storm worldwide.

Owning the physical precious metals and quality junior mining stocks is the only insurance one can have against the financial insanity that's about to be unleashed on a worldwide basis.

Get your house in order and prepare while you still can.

Here's one great way to do exactly that...

The ProShares Ultra Silver ETF (NYSE: AGQ) 

is designed to track double the daily market performance of silver.

The ETF seeks daily investment results that correspond to twice (or 200%) the daily performance of silver bullion, as measured by the U.S. dollar fixing price for delivery in London.

In other words, AQG is designed to increase 2% when the daily London fixed price of silver increases 1%. And of course, this works both ways: When silver prices decrease 1%, AQG is designed to lose 2%.

But this is very important...

The ProShares Ultra Silver ETF does not directly or physically hold the underlying silver bullion. Instead, the ETF seeks exposure to silver through derivatives.

Typically, I avoid investing in any kind of derivative like the plague. But the ProShares Ultra Silver ETF isn't really an investment instrument; it's really best used for trading.

As the price of silver retraced its steps earlier this month, I wrote to my subscribers urgently telling them these are the dip moments I have been talking about where you want to be a heavy silver buyer.

And the ProShares Ultra Silver ETF was the perfect trade.

It has already been a wild ride, but one that has brought great satisfaction to me in helping others to make money. What's even better is that the best is yet to come for the precious metals and the mining shares.

Stay tuned, stay focused, and don't let this bull toss you off its back. It's kicking and bucking to knock as many of you off as possible...

Hang tight. It will be worth the ride in the end.

Good Investing,

Greg McCoach

Silver below 50% of the 2011 range

Six days and 50% of the 2011 range is gone.  The level comes in at 38.09.  A move above this level will be needed to solicit any buying. Just like the trend higher is fast and directional, the countertrend lower, can be just as fast. Just as directional. And it has a lot of longs wondering and fearing where the bottom is located. A move back above the 38.09 level will be eyed for clues of a bottom  Above that level will is the 38.40 level from the trendline in the hourly chart below.

Where next for Gold-Silver and the SP 500 Indexes?

The market action in both the precious metals complex and the equities markets has been moving in clearly defined Fibonacci and Elliott Wave patterns for quite some time now. All of the recent peaks and valleys in both areas can be clearly demarcated with Fibonacci retracements and crowd behavioral patterns both in advance and in hindsight. I’ve written about this phenomenon numerous times publicly and every week for my subscribers as well.

The Gold and Silver movements I outlined a few months ago well in advance of the current bull moves. I had suggested we would see 1525-1550 on Gold at the next interim peak back in late January from the 1310 lows. So far we have hit $1508 and near term $1518 is likely before a pullback to the 1480 ranges. Silver has run up to my 45-47 window that I forecasted back when Silver was in the mid $26 ranges. The question is then, what happens next?

Back in August of 2009 I forecasted that we were about to enter a very bullish five year window for the precious metals, and this is based on my theory of a 13 fibonacci year bull market that began in 2001. Crowds move in reliable patterns and my opinion is the movement we are seeing now is the biggest of the 13 year bull because there is “Crowd recognition”. Recall the huge bull market in tech stocks that began in 1986 and ended 13 years later in 1999 with a massive spike to 5000 on the NASDAQ. The final five years were the best for investors before the crash.

Looking at the current precious metals bull market, we are in year 10 now and it’s like 1997 in the Tech stocks. The best is still yet to come, but there will be peaks and valleys along the way as the Bull knocks everyone off the whole way up. Most recently at $1310 in January and only a few weeks ago at $1382 for instance. When I wrote the August 2009 article, gold was around $900 per ounce, and now it’s $1508. In August of 2010 I then forecasted that Silver was about to start a massive run from $19 per ounce, and since then we have rallied to near $47 in just 8-9 months. Silver is poor man’s gold, and my theory really was simply that investors as a herd would view Silver as “cheap” and rush to buy it relative to Gold which would be viewed as “expensive”. The bottom line is intermediately we are getting close to short term tops in both Silver and Gold, and corrections will ensue… but those will again be buying opportunities.

Below are my latest views on Gold and the near term direction:

The Equities markets are also in a multi-year bull market and in the most bullish of the phase as well. We began in March of 2009 and ran up for 13 Fibonacci months to April 2010 where I forecasted an interim top. Since then, we bottomed in July of 2010 in a wave 2 correction that was a 38% Fibonacci retracement of the 13 month rally. The rally to the 1343 highs was only wave 1 of a new 5 wave structure to the upside. The recent correction that surrounded the Japanese Earthquake was another wave 2 down in sentiment, only to be followed by a powerful rally of almost 100 points on the SP 500 index. This type of “shrugging off of bad news” reaction is typical of powerful major 3rd waves in Elliott Wave terms.

The most recent action bottomed at 1295 on the SP 500 and that was minor 2 down, and now what you will see if I’m right is a huge move to over 1400 on the SP 500 as the 3rd wave of this recent structure off the 1240 futures lows of March, begins to take hold. Strap on your seatbelts because this market is going to blast past 1400 and on to 1500 this year. You will also see the NASDAQ lead the charge and make a power move into the 3000’s as well.

 Dave Banister- www.MarketTrendForecast.com

Taking a stab at silver and gold technicals

What are the technicals of a market that is trying to go straight up? Here we are talking about silver, of course, a market squarely in the crosshairs as April has already seen the largest “monthly” gain in the metal since…the Hunt brothers blowout. We also have a look at the more civilized gold market and its behavior.

It’s tempting to look at the weekly chart of silver below and decide that we have entered into a parabolic market where the price ramps by an ever increasing amount every day.

But as any equity trader looking at a longer term equity index chart knows, it’s important at some point to move to a logarithmic price axis once price moves begin to be measured in multiples of the starting price. A simple switch to a logarithmic price axis as shown below still leaves us in awe of the recent price move, but it appears far more modest.

What are the technicals of straight up?
Technical analysis breaks down to some degree when you have a market like silver has been lately, in  which seems to charge higher day in and day out with almost no ebb and flow that provides many of the anchor points for traditional technical analysis, like support and resistance lines, etc... Also, most “time window” types of analyses (stochastics, RSI, etc.) can break down when the move extends beyond a certain number of bars and the concept of oversold and overbought can become a bit trite when the action has taken the price several times the daily trading range above some arbitrary overbought/overold indicator that is meant to suggest an extreme.

There are a couple of ways to approach a viciously trending market in search of support and resistance or other signs that might indicate when the trend may be playing itself out. One simple way is to look for cyclical patterns and momentum patterns from the past to see how these have played out.

As we can see from the weekly spot silver chart displayed below, within the overall tremendous bull market in silver that has seen prices advance over 1000% from 2002 levels, there have been four bull markets (the last two are really one overall move) within the overall secular bull trend that account for the entire advance in the price of the metal over the last eight years. 

The seasons aren’t what they used to be
It is very interesting to note a couple of things about the patterns in this market: first, cyclically/seasonally, we immediately notice that the first three bull markets all established important new 200-day highs in the first or second week of November and last until anywhere from late March to early May – a move connected perhaps to the seasonal gold cycle and perhaps the Indian wedding season, where heavy buying traditionally starts in the late fall. Unfortunately, this time around, the critical new high that initiated the bull market was posted in early September – a timing suspiciously coinciding with the US Bernanke led Fed hinting at the coming of the QE2 money printing scheme in late August. Indeed, the precious metals markets these days seem to have little to do with the old seasonal factors and more to do with the entire theme of fiat currency credibility and whether the US Fed will succeed in destroying the US currency with the printing press.

Technical behavior most interesting
Beyond the seasonal argument and any possible fundamental drivers out there in the ether, there is also a technical behavior that is quite specific to silver – its tendency to accelerate beyond the established trend-line at some point, a development that quickly proves destabilizing and then eventually resolves quickly into a rather climactic sell-off and long period of consolidation. The acceleration tendency was certainly there in all of the first three bull markets, as the red circles show – particularly in the early 2006 market, and in two fits and starts in the big bull run in late 2007 to early 2008.

This time around, silver has established the steepest trendline yet compared with any of the previous bull markets, and in fact, even on a logarithmic price chart, the second leg (marked number 5) has proven the steepest. This last week of action has seen the largest deviation from the trendline – a development that bears watching in coming weeks for signs of further acceleration – if the chart quickly reverts to the trendline and stays “well behaved” relative to the established trend, the trend may continue even longer, but if we get another bar or two that sees a dramatic price acceleration beyond the trend-line, this would represent a “parabolic” move and likely pre-announce the end of the rally within just a few weeks of that development.

The key thing to note about parabolic moves is that while compressed in time, the price action can become almost unimaginably volatile, so (please, this is just an example/imagined scenario) the brave soul that shorts silver two weeks from now at a price of 73 dollars an ounce might be right in August, when silver trades at 53 dollars – but that won’t help much if he got stopped out at 93 dollars in late May… The Hunt brothers spike in early 1980 saw the price of silver do a similar dance – but it was quite a jig as the price doubled in less than four weeks from 25 to 50 dollars and then traded at 20 dollars about eight weeks after the peak.

Next week critical for precious metals
Another key note to keep in mind is that May silver options expire this coming Tuesday, 26 April (and the April silver contract stops trading the following day). One has to imagine that there are some enormous winners and losers holding these contracts, those who bought and sold at strikes that were unimaginably far away a month or more ago. In the meantime, there are endless reports of tightness in the physical silver market and emotion is running high. To top things off, the London Bullion Market Association, a huge presence in the physical market, is out for Easter holiday tomorrow and Monday.

If that is not enough, we also have the FOMC meeting late Wednesday and further UK disruptions from the royal wedding in the UK next Friday and the following Monday. We have to imagine the price next week at this time will be … anywhere but where it is now?

What about gold?
Gold has been a far more staid market than silver, a bit less prone to the blowout rallies and subsequent blowout retreats, but the metal has also seen an enormous 350% advance since early 2005. 

Chart source: Bloomberg
We have drawn a linear regression to show that gold may be getting a bit expensive locally within the overall trend as it approaches the 1 standard deviation line on the upside. This assumes we don’t kick into a high gear scenario with panic surrounding the US dollar as QE2 expires at the end of June and the market gauges whether the Fed ultimately prepares the way for QE3. The stakes for all financial markets, especially precious metals, will be very high in the coming several months, not only due to the US central bank and the dire US fiscal straits, but also as the EU grapples with a refresh of its EFSF bailout mechanism at the June EU summit and all of the implications this could have for the sovereign debt issue there.

Have a wonderful weekend and a wonderful holiday if you are taking one.

Silver's Mine Supply to Hit New Record This Year, Surplus to be Absorded by investment Demand

Outperformance of silver over gold has sent the gold/silver ratio to around 36/37, the lowest level in almost 3 decades. Geopolitical tensions, natural disasters and subsequent radiation leak in Japan, and ongoing sovereign debt problems in the European periphery have increased demand for safe-haven assets. Meanwhile, rising inflationary pressures resulting from surges in commodity prices and maintenance of expansionary monetary stances by the Fed, the BOE, the BOJ, etc, have raised the need for inflation hedges. Gold is a traditional alternative to fiat currencies and risky assets in such an environment. However, silver has been increasingly appealing in recent years as many investors view it as ‘poor people's gold.

From a fundamental perspective, outperformance of silver appears abnormal given the oversupply situation. Mine supply has been on the rise since 2003. According to GFMS, mine production, accounting for 70% of total silver supply, climbed +2.5% to 735.9M oz with Mexico surpassing Peru as the world's largest silver producing country in 2010. Mine supply is expected to hit another record this year with several new projects in Mexico, Peru and Argentina starting operations. Sales of silver scrap rose +14.1% to 215M oz and producer hedging (61.1M oz) returned for the first time in 5 years as a result of higher prices. Primarily from Russia, net government sales almost tripled to 44.8M oz last year.

On the demand side, while investment demand was and will continue to be the major growth driver, industrial demand will also surge in tandem with the global economic upturn. As we mentioned in our report, ‘New Regime for Silver', the use of silver in the photo voltaic (PV) industry will be a shining star. We believe demand forecasts in the area will have to be revised higher as policymakers across the global rethink their energy strategies after the nuclear crisis in Japan. While sharing the same view that the use of silver in PV will be growing, the GFMS said in ‘The Future of Silver Industrial Demand‘ that silver's antibacterial qualities may be applied on making of cooking utensils, kitchen detergent and refrigerators.

While evolution of new drivers is expected to boost silver demand, excess supply will have to be absorbed by investment demand which is the key determine of silver prices in the near- to medium-term. We retain our bullishness in silver as the global economic and political outlook remains highly uncertain. Yet, investors have to be cautious about volatility in silver prices. Moreover, a massive correction is likely if economic growth proves to be tampered by high oil prices.

Why Silver Will Go UP for Years to Come!

(Floods of paper money!)

1.  No nation on earth is using silver as a circulating medium of exchange.  The State of Utah is leading the way by making it legal tender.

2.  All nations on earth are using paper for money, which is about as wise as building houses out of straw.  The amount of paper money is uncountable, and is constantly soaring to new highs.  The USA stopped reporting the amounts of money in the banks back in 2006, and the banks in 2008 started depositing a lot of their bailout money with the Fed banks, making it even harder to track.  All of that marks the beginning of hyperinflation, which appears to be starting now. 

3.  The Federal annual deficit, which is how much they spent more than they took in, is $1.66 trillion, or $830 billion for the first half of fiscal 2011.  Does that count QEII?  What was not counted in that?  How reliable are the figures?  If the figures are wrong, are the real figures likely to be bigger or smaller, and by how much?

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201104071404dowjonesdjonline000595&title=us-government-posted-830-billion-deficit-in-first-half-of-fiscal-11cbo

4.  The silver market remains tiny. "World investment rose by an impressive 40 percent last year to 279.3 million troy ounces (Moz), resulting in a net flow into silver of $5.6 billion, almost doubling 2009’s figure."  How reliable are the figures?

http://www.silverinstitute.org/pr07apr2011.php (April 7th news item)

Recap:  New US Debt:  $830 billion in 6 months.
Recap:  New Silver buying:  $5.6 billion, all year.

Essay assignment, compare and contrast those two numbers. 

Which one is bigger?  Which one is smaller? 

What is likely to change? 
What is likely to stay the same?

If the US government spends new paper money that it does not have, is that inflationary?  Will that make the new dollars tend to go down in value?  If so, by how much?

Are silver prices likely to go up, as new money buys silver to protect itself?  In your opinion, much new money will be likely to buy silver next year?  How much do you think the silver price will continue to be driven up, in the next year, by such buying?

Is the US government likely to suddenly balance the budget by next year, or will the spending like a drunken sailor be likely to continue?

If you convince your friends to buy silver, are they more likely to thank you, or not, as certain trends and fundamentals continue?

I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can.   The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.
Follow me on facebook!
http://www.facebook.com/jason.hommel   

Sincerely,

Jason Hommel

 

The Most Important Silver News in Nearly 30 Years

The Most Important Silver News in Nearly 30 Years

Way back in 2002, my target for silver was $187.50 an ounce.

I got it by dividing $3,000 by 16. My target for gold back then was $3,000 before this bull market was finished. How did I get that figure? As I recall, the price of gold was at $300, and I thought it would soar enough to add another zero on that. Based on that figure, why did I divide 16 into it to get the $187.50?

The traditional ratio of gold to silver, over the centuries, was 15-16 ounces of silver equaling one ounce of gold. That's what it had been in 1792, when the U.S. dollar was born. It was often that way in the centuries before this. Most recently, at the peak of the precious metals bull market in January 1980, it reached this level again.

Certainly, there have been extremes at either end. In the 1500s, when Spain discovered so much new gold (and silver) in the New World of South America, it shipped the gold home more than the silver. After all, one pound of gold was worth many times more than one pound of silver, so who can blame them for concentrating on mining and shipping gold over silver? The problem was so much gold was sent that, at the extreme around 1560, on the London markets gold's supply became so great (relatively speaking) that it took only about six ounces of silver to equal one of gold. This extreme didn't last long.

At the other extreme, exactly 20 years ago, when silver hit its bear market low of $3 and change, the ratio rose to over 100 to one. Silver had become almost ludicrously cheap. That's one of the reasons Warren Buffett stepped in to buy silver. But as he has admitted, "I got in too early and I sold too early." It would be another 10 years before silver's bull market would really begin.

In the years since 2001, silver has risen more than gold has. Silver has gone up 793% since the November 2001 lows of $4.03. Gold has "only" risen 458% since its 2001 low. This means the ratio of gold to silver has changed. At the point when silver hit its most recent low in October 2008, it took nearly 90 ounces to buy one gold ounce. This was plainly too much and silver was too cheap.

The chart below shows the ratio going back to 1981, over 30 years. In other words, it shows the ratio both in bear markets for the metals (1989 to 2001) as well as bull markets (2001 to the present).

Regardless what the metals are doing in relation to paper currencies like the U.S. dollar, they have been remarkably volatile compared to each other.


During the grinding bear market of the 1990s, when both metals fell off of investors' radar screens, the gold/silver ratio plunged from 100 to just over 40 to one in just a few years. Several times, the ratio has visited this area. Each time, gold immediately proceeded to become relatively stronger. Silver's relative strength was not enough to move it further down… until now.

From the long-term perspective, we move to the very recent trend:


Over the last six months, you see how the gold-to-silver ratio has been moving lower. Silver has been relentlessly moving up faster than gold. Back in early September of last year – just six months ago – the ratio was over 60 to one. Now, as I write, it has broken 40.

In other words, the ratio got to where silver's relative strength has been turned back several times in recent years… and kept going. On Monday, the ratio got as low as 39.32. It has since backed up a bit. But it has broken the boundary, and this is very bullish for silver.

In the latest issue of my newsletter, I told my readers to be prepared for the possibility that the ratio would be again turned back at 40. This would either mean that gold and silver would both continue to rise, but that gold would start to soar much higher than silver, or both metals would fall, but silver would fall more than gold.

In that case, you'd want to make sure to own some gold along with your silver. That advice still stands.

But as I told my readers – and as you can see from the long-term chart above – the gold-to-silver ratio hasn't flatlined for decades: It's usually going one way or the other rather dramatically.

Right now, it's going down dramatically. That's big news for silver.

Good investing,

Chris Weber

Best Article on Silver in Ten Years!

(Not written by me!)

Silver Stock Report

by Jason Hommel, March 7th, 2011

This is probably the best article on silver (not written by me) in the last ten years.

The Silver Bullet And The Silver Shield
By Silver Shield, on February 25th, 2011
The Ultimate FREE Silver Investors Guide.
http://dont-tread-on.me/the-silver-bullet-and-the-silver-shield

This article covers so much, so well.  I have almost no arguments with the author, and that's really saying something.  I linked to this article once already, when I had scanned it, but after having read it, I can say you MUST READ THIS!

The best argument for silver is that when you buy real silver, you own real wealth, with allodial title.  Unlike your car, your home, or your bank account, or your brokerage.  All the other stuff can be encumbered easily.  Your car is registered annualy for a fee.  On your home, you pay property taxes.  On your bank account, you lose money due to inflation, and it's really the bank's money.  Your brokerage accounts, you pay a fee, and your stocks are also in the name of the DTCC.  http://www.dtcc.com/ 

With silver and gold, in your hand, ONLY YOU own them, and you don't owe anyone else anything at all, they are not registered, you pay no ongoing taxes or fees.  Storage will cost you only slightly more than to keep yourself safe.  Buy a vault, and a gun, and take responsibility for your own wealth, it's really simple.

This one article is making waves, and already making enemies, and revealing bias among others in the precious metals community.

My Skirmish With 321Gold
By Silver Shield, on February 27th, 2011
http://dont-tread-on.me/my-skirmish-with-321gold

The author tried to get it published at 321gold.com, and ran into a problem.  The article is too good, kind of like an article I wrote and submitted to 321gold.com about 4 years ago, when silver was just over $6/oz., see:

I am Insanely Bullish on Silver
http://news.silverseek.com/GoldIsMoney/1087707141.php

I published Bob's nasty comments to me here:
http://silverstockreport.com/reports/silverstockreport40.htm

Bob, of 321gold.com, is part of the problem.  He would rather not publish well researched facts, to "save his readers" from buying into what he thinks was a near term top that might see a 10% pullback.  He doesn't want his readers to buy into a top; to protect his readers, or to protect his reputation?  OK, I hope I helped to expose him for what he is.  Apparently, Bob was trying to protect his readers from the risk of buying silver at $6/oz., too!  HA HA!!

Well, I'm also part of the problem.  I'm selling silver, oh no!  I'm helping to keep a lid on prices!  (Not really).  I just raised my prices just a bit tonight because we are selling out of inventory just a bit too fast.  There will be absolutely no discounts for anyone after 10AM tomorrow, unless someone orders over $100,000, and is willing to wait for delivery from our wholesalers.  Today, we sold over $280,000 worth of precious metals, or more, and bought about $5000 worth from the public, the rest was repurchased from our suppliers; mints, refiners, and wholesalers.  Tomorrow will be another shockingly busy day.

Here's my worry:  The news is that JP Morgan has shorted 6000 contracts last week, when there were no other sellers, and is rumored to be paying out 80% premiums to holders of silver futures to take cash settlement offers, because they can't come up with the silver to deliver.   This is a delivery default, the one we were watching for.  JP Morgan sold 30 million oz. of silver, on paper, which is over twice the world mine supply for the week.

http://beforeitsnews.com/story/462/532/Word_is_JP_Morgan_is_Paying_80_Premium_this_month_of_March_for_Comex_Silver_Standing_Contracts.html

So far, I can survive this ongoing default and silver eagle shortage, since I can sell low on Eagles, and simply stock up on other forms of silver.

Here's another shocker!  JP Morgan Chase is our bank.  Sorry.  They just asked us, as if it's standard business practice for all of their clients in the bullion trade, to name all of our suppliers.  I said, "Why bother, you have our banking records, you know who our suppliers are, but I'm not going to tell you specifically."  If they insist, I'll simply list the LBMA refiners

http://www.lbma.org.uk/pages/index.cfm?page_id=30

Those are JP Morgan's suppliers, there appear to be about 100 refiners on their list, and they can't find enough silver to back even 5000 contracts, for 25 million oz. of silver!

Ted Butler reveals that JP Morgan, acting like a cornered rat, sold short 6000 contracts of silver, and increased their manipulation even more.

Silver Shocker
By: Theodore Butler
Posted 7 March, 2011
http://news.silverseek.com/SilverSeek/1299509764.php

What to do?  More good advice:  Buy physical:

I Get It Now

By Silver Shield, on March 3rd, 2011
A beginners to guide to investing in physical silver.
http://dont-tread-on.me/i-get-it-now

Only problem I have with that report is that the author says to avoid bullion dealers, or coin shops.  Well maybe most of them, but not all of them.  We, at JH MINT, don't push any numismatics on anyone.  We steer people away from numismatics, and into the cheapest bullion we can find.  Then, we buy back more of it, in bulk, fast.

So, we recently read that Jim Puplava waited 3 months for a tonne of silver, and Sprott waited for 2 months for a few million ounces.  We never wait for more than 7 days for silver; we only buy it from people who have it available for immediate delivery.  And we only sell what we have.  And if we don't have it, we know we can get it fast. 

It's a shame that these other people never contacted us.  We would have loved to help them find out where to order silver.  Again, contact the suppliers on the LBMA list, it's no secret.  But be prepared for $300,000 minimum orders, or even a minimum order for 300,000 oz. of silver from a big producer like Penoles; that's about what they produce every day.

JP Morgan's problem is that the Penoles silver production, less than 9 million oz. over 30 days, is likely already spoken for, and is less than they need this month. 

It will be an interesting month.


I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can.   The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.

Follow me on facebook!
http://www.facebook.com/jason.hommel

Or Youtube!
http://www.youtube.com/user/bibleprophesy

This Is the Critical Number to Watch for Silver

By Chris Weber, editor, The Weber Global Opportunities Report

 Here's my dilemma: I love the silver and gold area. I have more money in silver than in any other asset. And combining both silver and gold, I have about 75% of my total net worth in these two precious metals. This includes everything else I own: property, stocks, cash, etc.

To me, silver is that asset class that has the most potential to give profits in our age. So far, this has been the case. From $4 in late 2001 to nearly $31 at the end of last year, this is a profit of over 650%. You tell me if any other index or asset class has done better since 2001.

But, knowing silver as I do (I first bought it back in 1971), I know that it can quickly plunge, even if that plunge turns out to be temporary. And the last thing I want for my newer readers is for them to buy silver in large percentage terms and then see it fall by 30% or more. My heart has been sick at the numbers of people who have panicked and bailed out of silver when this happens. Usually, they never get back in.

This was the case for the last great silver bull market in the 1970s, and it has been the case this last decade. Last time, silver soared from $1.29 to around $48. That's a rise of over 3,600%. Yes, I was lucky to get in near the bottom and get out near the top. But I simply bought and held during all the many plunges during that time. But when silver plunges over 50% in a few months, the instinct is to panic.

We've seen such a move already this time. In March 2008, silver had just popped above $20, having soared by nearly 80% in price since that prior August.

Then it corrected.

First, it plunged quickly to the $17.50 area, a fall of 20%. Then, like most corrections, it made a mild stab at a recovery. But the highest it ever got was still well below the old high. It got, I believe, to $19 and change – still a good 10% below the high. And then, it fell fast and hard, the way silver always does when it corrects. By October, it had broken below $10, and the total loss, from peak to trough, was 60%.

Of course, by late October of 2008, most silver holders had bailed out, unless they listened to me and kept calm.

Now, fast-forward to today. I have been prepared for a similar correction in silver after what it has done starting from those $8.80 lows in late October 2008 to just at the end of last year, at $30.91. That percentage rise was 251%.

But here's the thing… Silver is not correcting like it usually does.

Yes, it fell back in January from the $30.91 peak of December 31 to a low of $26.68. Actually, it was a double low. It reached that price on January 25, then rose, and fell again back to this level on January 28. Since then, it has been all up.

So consider it… Silver falls initially from $30.91 to $26.68: a fall of 13.7%. Normally, this is a small initial fall, and you'd expect to see a sharp initial fall of 20% or so. But then, it charges up again.

I'm telling you, I've watched the silver market for four decades in "real time" and much more than that in research, and I have never seen such strength.

So even though I would prefer to get my new readers into silver at much lower prices, I can no longer in good conscience advise my readers to wait on the sidelines in hopes of getting a discount.

You have to make a hard choice now. Ideally, you want to have as much of your money in silver so that if it never corrects back to $20 or even $25, you'll be in a position to profit from the big rises of the future. However, you don't want to have so much of your money in silver that if it finally does correct to those levels, you'll panic, lose heart, and sell out.

If silver goes over the old highs and keeps on going, this will mean the silver bull market is one of a strength so great as to make it a force of nature.

The next few days or even hours are critical.

If silver can close above its "old" $30.91 of just New Year's Eve, we are likely in for another leg up. My next bullish target is $49. I had expected a bigger correction first. But in this world, you take what you get and work with it as best you can.

Good investing,

Chris Weber

Don't buy Gold Now : Jim Rogers: I Would Rather Own Silver Than Gold

Silver is becoming a better investment than the one of the hottest commodities of the past few years, gold, says investment guru Jim Rogers.

Rogers, a commodities champion, says silver prices have more room to grow than do gold prices.

“I would rather own silver than gold," Rogers tells India's ET Now.

“Silver is still 40 percent below its all-time high. So silver has not been any sort of great bubble compared to perhaps some other assets we know."

Other commodities make for good investments as well, including agriculture.

“Likewise for the rice, if rice goes down, I will buy more rice. So both the silver and rice have a great future for the next few years,” Rogers says.

Precious metals tend to rally when the world's reserve currency, the dollar, weakens.

The U.S. Federal Reserve has been printing money in an effort to spur economic recovery, sending the value of the greenback down in the process.

While the dollar has erased some losses in recent trading, concerns over expansionary monetary policy on top of deficit spending in Washington are fueling inflationary fears, which has investors rosy on the outlook for precious metals, gold especially.

"The majority of factors for gold are very positive," Credit Suisse precious metals analyst Tom Kendall tells Reuters.

"If you were looking for negatives, you would have to say the lack of any sizable de-hedging program this year from the miners would be one that you could pick up on, but from the investment community, sentiment is still very much bullish towards gold."

Source: Money News

Commodity Weekly: A shaky beginning to 2011

Commodity markets have struggled to maintain the momentum from December with several markets seeing corrections during the first few trading days.

The all important market driver, the US stock market, kicked off the year with a new two year high on the back of economic data that continues to improve. Meanwhile, in Europe worries about the sovereign debt situation continues to attract attention with the cost of insuring Greek government debt rising to the highest level so far. This has helped the dollar rally 3 percent versus the euro thereby reducing some of the support for dollar based commodities.

The Thomson Reuters/Jeffries CRB index began the year with losses across the board as the speculative position size has left the sector prone to corrections. It is also worth noting that the index returned an impressive 10 percent during December so short term caution has pushed the overall expectation for 2011 to the back of investors' minds for now.

 The beginning of January is the time for the annual rebalancing of index funds such as S&P GSCI and DJ-UBS. Every year they adjust their weightings of the different commodities based on various measures of which the performance the previous year is the most important. The major impact of this exercise generally tends to support commodities that have fallen during the previous year while strong performers will attract some selling.

The rebalance which takes place from Friday January 7 until the following Thursday will see a noteworthy inflow of approximately 2.6 billion dollars into natural gas. The energy complex as a whole should attract 4.1 billion while grains and soft commodities, should see outflow of 2.7 and 1.1 billion respectively. The change in metals is one of a slight reduction with flows into gold, zinc and aluminum offsetting outflows from silver, copper and nickel.

As these changes are well publicized in advance, the actual impact once it begins is always questionable but nevertheless highlights the dramatic differences in performances seen during 2010.

Most of the major research houses and commentators expect another strong year for commodities as cyclicals like energy and base metals will perform amid shrinking inventories and increased economic activity, while some food commodities like corn will be supported amid worryingly low global inventory levels.

This has resulted in 2011 beginning with speculative long futures positions across U.S. exchanges at a record high of 1.85 million contracts. From the chart the most noticeable sector is the grain and oilseeds with corn and soybeans alone counting for 708.000 lots while the energy sector disguise a four year high position in WTI crude due to a large short position in natural gas. Beginning a year at such elevated speculative levels carries a risk of corrections as traders are reluctant to accept loss making positions until some traction has been achieved.

The UN FAO released their December update to the world food index and it showed that global food prices hit a record high last month surpassing the levels seen during the 2007-2008 food crises. However, the cereal component which contains wheat and rice still sit some 14 percent below the 2008 peak. These two cereals are the most important staples with rice alone feeding three billion people in Asia and Africa.

Sugar, which trades at a 30 year high, has been the main driver behind the index reaching the record level but does not attract the same importance from a food security point of view. It nevertheless highlights the risk of food inflation which will be a returning theme for 2011. Especially in emerging economies where it is currently running at ten percent and is set to increase further over the coming months.

WTI crude oil has begun the year hovering around 90 dollars which is viewed as being center of a potential twenty dollar trading range. The speculative long is at a four year high which at this time of year plays an important role as a correction is bound to trigger some additional selling. Fundamentals for the year ahead are pointing a picture of increased demand but also one of plenty available excess capacity, with OPEC sitting on 5 million barrels per day.

The market will be watching the continued progress of the US economy and also the potential adverse impact on continued monetary tightening in China. During December oil demand from US, the worlds' largest consumer, breached 20 million per day for the first time since February 2008. Inventories at Cushing, the delivery hub into NYMEX WTI crude, is approaching 38 million barrels, the previous record from six month ago. This excess supply has helped put the front month under some pressure relatively to other crude oil products like Brent Crude.

 Technically the WTI crude contract for February delivery has established a small range either side of 90 dollars. Warning signs of additional corrections will become apparent on break below the December low at 87 which also corresponds with the previous high back in April 2010.

Silver, which rallied the most in 2010, has had a very shaky start to 2011 falling by seven percent at the time of writing and in the process breaking the uptrend from August last year. Investor demand through ETF investments were the main driver during 2010 as the fundamental outlook unlike gold and platinum did not offer much support. The impressive outperformance over gold during the second half of 2010 has come under some pressure these past few days with the annual rebalancing being used as one explanation.

Technically should the correction lead to a break below 28 dollars the next major support level will be 24.90 the 38.2% Fibonacci retracement of the 2010 rally.

 Turning to the grain and oilseed market, the USDA will issue four important reports on Wednesday January 12 and they could set the tone for trading over the coming weeks. With lack of any demand rationing seen so far in corn it is expected that the forecast for 2010/11 ending stocks will continue to point towards the tightness that has supported prices over the past few months. Poor weather in South America is expected to have had an impact on the Argentine soybean production which in turn could divert more global demand pressure towards the US market. A wait and see approach is currently being adapted by the market with trading having been fairly subdued so far.

Commodities and Commodity Stocks Show Continuing Strength

Commodities and commodity stocks show continuing strength.
Energy stock sector absolute price rose further above 2-year highs and remains bullish.

Materials stock sector Relative Strength Ratio (XLB/SPY) rose above 11-month highs and remains bullish. Absolute price rose above 2-year highs and remains bullish.

Dow-Jones Composite and Industrial Averages and the S&P 100 Large Cap Index rose above 2-year highs, again reconfirming major uptrends.

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell further below 4-month lows and remains neutral.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) rose above 8-month highs and remains bullish. JNK absolute price also remains bullish.

Silver/Gold Ratio rose above 3-year highs, again confirming a bullish trend. Silver has outperformed Gold substantially since 8/20/10.

Silver and Gold futures both rose above 3-week highs, signaling short-term uptrends.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) rebounded back above its 50-day SMA on 12/28/10, thereby turning bullish again.

CRB Index of commodity prices rose above 2-year highs, again reconfirming a major uptrend.

The U.S. dollar price fell below 5-day lows, confirming a short-term downtrend.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Spotlight on event stocks: Here is a stock screen I designed to pick out potential event stocks, both Bullish and Bearish. Sometimes, stocks with large changes in price and volume are revealed to be deal stocks, sooner or later, or are the subject of some other extraordinary events, positive or negative.

Bullish Stocks: Rising Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
0.24% , UTH , Utilities H, UTH
3.29% , SLV , Silver Trust iS, SLV
0.62% , DGT , Global Titans, DGT
2.01% , PST , 200% Short Bond 7-10 Yr T, PST
1.63% , GLD , Gold Shares S.T., GLD
3.80% , TBT , 200% Short US T Bond, TBT
5.16% , SIRI , Sirius Satellite
1.56% , BSX , BOSTON SCIENT
3.63% , KEY , KEYCORP
2.23% , WPO , Washington Post
1.44% , BDX , BECTON DICKINSON
2.43% , NEM , NEWMONT MINING
1.31% , WAG , WALGREEN
0.75% , PDCO , Patterson Dental Company
1.63% , IAU , Gold COMEX iS, IAU
0.80% , LBTYA , Liberty Global Inc. (LBTYA)
0.57% , AZO , AUTOZONE
0.37% , DDM , Ultra Dow30 Double, DDM
0.15% , PSQ , Short 100% QQQ, PSQ
1.00% , PPG , PPG INDUSTRIES
2.34% , SHLD , SEARS HOLDINGS
0.72% , NCR , NCR
0.31% , IOO , Global 100, IOO
1.19% , CVX , CHEVRONTEXACO
0.18% , NYC , LargeCap Blend NYSE Composite iS, NYC
0.73% , IGE , Natural Resource iS GS, IGE
0.46% , CL , COLGATE
0.98% , URBN , Urban Outfitters Inc.
0.87% , COST , COSTCO WHOLESAL
1.03% , HPQ , HEWLETT PACKARD
2.04% , FITB , FIFTH THIRD BANC
0.25% , IXJ , Healthcare Global, IXJ
0.88% , NBR , NABORS

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.06% , PIC , Insurance, PIC
-3.05% , LXK , LEXMARK INTL STK A
-0.61% , XBI , Biotech SPDR, XBI
-1.98% , KWT , Solar Energy MV, KWT
-0.83% , EWD , Sweden Index, EWD
-2.29% , TLT , Bond, 20+ Years Treasury, TLT
-0.77% , PSTL , Steel Global PS ETF, PSTL
-2.33% , KBH , KB HOME
-1.69% , TLH , Bond 10-20 Year US Treas, TLH
-0.39% , IGN , Networking, IGN
-1.31% , IEF , Bond, 10 Year Treasury, IEF
-0.95% , CMS , CMS ENERGY
-1.24% , CBS , CBS CORP.
-1.37% , HANS , Hansen Natural, HANS
-2.86% , MBI , MBIA
-1.64% , S , SPRINT NEXTEL
-1.51% , LTD , LIMITED BRANDS
-2.96% , DHI , D.R. HORTON, DHI
-0.96% , DDS , DILLARD STK A
-0.33% , IGV , Software, IGV
-0.28% , IWP , Growth MidCap Russell, IWP
-0.78% , IIH , Internet Infrastructure H, IIH
-0.65% , ECH , Chile MSCI iS, ECH
-0.12% , IGM , Technology GS, IGM
-1.29% , ATI , ALLEGHENY TECH
-1.13% , TMO , THERMO ELECTRON
-0.77% , PETM , PETsMART Inc
-0.61% , SHW , SHERWIN WILLIAMS
-1.03% , ADM , ARCHER DANIELS
-1.38% , LVLT , LEVEL 3 COMMUNICATIONS
-0.72% , GRMN , GARMIN LTD
-1.17% , EFX , EQUIFAX
-0.98% , KSU , Kansas City Southern, KSU

9 major U.S. stock sectors ranked in order of long-term relative strength:

Energy (XLE) Bullish, Over Weight. The Relative Strength Ratio (XLE/SPY) rose further above 12-month highs on 12/6/10 and remains bullish. Absolute price rose further above 2-year highs on 12/28/10 and remains bullish. Support 65.03, 60.96, 60.21, 57.70, 55.68, 53.22, 50.33, 48.56, 46.16, and 43.66. Resistance 69.95 and 78.10.

Materials (XLB) Bullish, Over Weight. The Relative Strength Ratio (XLB/SPY) rose above 11-month highs on 12/28/10 and remains bullish. Absolute price rose above 2-year highs on 12/28/10 and remains bullish. Support 34.20, 33.70, 32.36, 29.88, 29.43, and 27.67. Resistance 39.00, 40.15, and 41.06.

Consumer Discretionary (XLY) Neutral, Market Weight. The Relative Strength Ratio (XLY/SPY) crossed below its 50-day SMA on 12/27/10, thereby turning neutral. Absolute price rose above 3-year highs on 12/7/10 and remains bullish. Support 37.15, 36.61, 36.13, 35.32, 35.02, 34.78, 33.94, 33.11, 32.66, 31.70, 29.80, 28.64, 28.21, and 26.62. Resistance 37.88, 39.09, 40.13, and 40.70.

Industrial (XLI) Bullish, Over Weight. The Relative Strength Ratio (XLI/SPY) rose above 2-year highs on 12/16/10 and remains bullish. Absolute price rose above 2-year highs on 12/22/10 and remains bullish. Support 31.82, 31.58, 30.79, 30.51, 30.32, 29.77, and 27.67. Resistance 35.00 and 36.16.

Technology (XLK) Neutral, Market Weight. The Relative Strength Ratio (XLK/SPY) fell below 8-week lows on 12/16/10 and turned neutral for the secondary trend. This RS ratio rose above 8-year highs on 11/3/10, which was a bullish confirmation of the primary uptrend. Absolute price of XLK rose above 2-year highs on 11/4/10 and remains bullish. Support 23.87, 23.74, 23.64, 23.56, 22.68, 22.53, 21.60, 20.01, and 19.51. Resistance 25.32 and 25.69.

Financial (XLF) Neutral, Market Weight. The Relative Strength Ratio (XLF/SPY) rose above its 50-day SMA on 12/8/10, thereby turning neutral. Absolute price turned bullish as of 12/22/10 when the rising 50-day SMA crossed above the rising 200-day SMA. Support 15.39, 15.08, 14.36, 14.25, 14.20, 13.29, and 13.08. Resistance 16.13, 16.90, 17.12, 17.16, and 17.87.

Consumer Staples (XLP) Bearish, Under Weight. The Relative Strength Ratio (XLP/SPY) fell further below 7-month lows on 12/27/10 and remains bearish. Absolute price rose above 2-year highs on 12/16/10 and remains bullish. Support 29.23, 29.10, 28.22, 28.04, 27.76, 27.63, 27.46, 26.34, 25.30, and 24.95. Resistance 30.29.

Health Care (XLV) Bearish, Under Weight. The Relative Strength Ratio (XLV/SPY) fell below 2-year lows on 12/9/10 and remains bearish, as it has been most of the time since peaking on 2/23/09. Thanks to a bounce over the past 3-days, absolute price of XLV is technically bullish. Support 30.14, 30.11, 29.87, 28.00, 27.49. Resistance 31.79, 32.05, 32.18, 32.42, 32.69, 33.16, 33.37 and 33.74.

Utilities (XLU) Bearish, Under Weight. The Relative Strength Ratio (XLU/SPY) fell below 7-month lows on 12/21/10 and remains bearish. Absolute price of XLU fell below 4-year lows on 12/21/10. Support 30.51, 29.66, 27.91, 27.44, and 25.76. Resistance 32.11 and 32.40.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell further below 4-month lows on 12/28/10 and remains neutral.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) broke down below 5-month lows on 11/30/10 and remains neutral.

NASDAQ Composite/S&P 500 Relative Strength Ratio rose above 9-year highs on 11/26/10 and remains bullish for the long term. This RS Ratio has been in an uptrend for nearly 2 years, since 12/2/08.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below 28-year lows on 12/3/10. This RS Ratio has been trending lower since 8/3/10. Longer term, big caps have been relatively out of favor for more than 10 years, since 3/29/2000.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) rose above 20-year highs on 12/21/10 and remains bullish. Absolute price closed above 2-year closing price highs on 12/27/10 and remains bullish.

The S&P MidCap 400/Large Cap Relative Strength Ratio (MDY/SPY) rose above 15-year highs on 12/17/10 and remains bullish. Absolute price closed above 2-year closing price highs on 12/22/10 and remains bullish.

CRB Index of commodity prices rose above 2-year highs on 12/23/20, thereby reconfirming its preexisting bullish major trend.

Crude Oil nearest futures contract price rose above 2-year highs on 12/27/20 reconfirming its preexisting bullish major trend. Support 87.43, 86.83, 83.55, 80.28, 80.06, 79.84, 79.25, 78.86, 72.63, 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 98.65 and 102.84.

Gold nearest futures contract price rose above 3-week highs on 12/28/10, signaling a short-term uptrend. Gold rose above previous all-time highs and confirmed a bullish major trend on 12/7/10. Support 1361.6, 1352.6, 1329.0, 1325.5, 1317.5, 1297.0, 1274.8, 1270.5, 1232.4, 1210.9, 1191.5, and 1155.6. Resistance: 1432.5.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) rebounded back above its 50-day SMA on 12/28/10, thereby turning bullish again.

Silver nearest futures contract price has been rising again in recent days. Silver rose above previous 30-year highs on 12/7/10, thereby confirming its preexisting bullish major trend.

Silver/Gold Ratio rose above 3-year highs on 12/28/10, again confirming a bullish trend. Silver has outperformed Gold substantially since 8/20/10.

Copper nearest futures contract price rose above multi-year highs on 12/21/10, thereby reconfirming its preexisting bullish major trend. Strength in Copper suggests confidence about prospects for the world economy, while weakness in Copper suggests doubts. Support 3.9795, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: none.

U.S. Treasury Bond nearest futures contract price fell below 6-day lows on 12/28/10, signaling a short-term downtrend. The bond contract fell below the lows of the previous 7 months on 12/15/10, confirming a bearish major trend. Support 118.21, 118.12, 115.15, 114.06, 113.04, and 112.15. Resistance 129.14, 129.27, 132.26, 133.00, 135.12, 135.19, 136.31, 137.31, and 142.31.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) rose above 8-month highs on 12/28/10 and remains bullish. JNK absolute price rose above 6-week highs on 12/27/10, which is bullish for the short term. Price rose above 2-year highs on 11/4/10 and remains bullish for the longer term.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) has firmed up moderately since making a low on 8/24/10, even as absolute price of TIP has declined. A rising RS ratio implies that fixed-income investors have been selling inflation protected Notes at a relatively more subdued pace compared to the U.S. Treasury 7-10 Year Note (IEF) over the past 4 months.

The U.S. dollar nearest futures contract price fell below 5-day lows on 12/28/10, confirming a short-term downtrend. USD may have found resistance near its 200-day SMA, which stands near chart resistance at 81.525 to 82.02. Longer term, USD fell below 11-month lows on 11/3/10, thereby confirming a bearish long-term price trend. Support 78.01, 75.23, 74.27, and 70.80. Resistance 81.525, 82.02, 83.64, 84.73, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.

Advisory Service Sentiment: There were 58.8% Bulls versus 20.6% Bears as of 12/22/10, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear ratio stands at 2.85, which is nearly two standard deviations above the long-term, 20-year mean. This is not overly excessive bullish sentiment in the second year of a bull market. Bullish Sentiment tends to rise in November and December every year. The ratio was as high as it is now or higher in Decembers of each year 2003, 2004, 2005, and 2006, and none of these “high” readings led to bear markets. The 20-year range is 0.41 to 3.74, the median is 1.54, and the mean is 1.61.

VIX Fear Index fell below 8-month lows to 15.40 on 12/23/10, reflecting diminishing fear among options players. VIX is near its 3-year low of 15.23 set on 4/12/10. Before we take the current level of VIX as a sell signal, however, we might consider that VIX was as low as 9.89 on 1/24/07, nearly 10 months before the final tops in the price indexes. VIX is a market estimate of expected constant 30-day volatility, calculated by weighting S&P 500 Index CBOE option bid/ask quotes spanning a wide range of strike prices for the two nearest expiration dates.

The Dow Theory reconfirmed a Primary Tide Bull Market as of 12/14/10, when the Dow-Jones Industrial Average closed above 2-year closing price highs, thereby confirming the new high in the Dow-Jones Transportation Average set on 12/10/10. The Dow Theory originally signaled the current Primary Tide Bull Market on 7/23/09, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 6 months. Many other analysts were fooled into calling “Bear Market” by the big downside Secondary Reaction in May and June 2010, but my interpretation has been steadily Bullish on the Primary Trend.

S&P 500 Composite (SPX, 1,258.51) rose above 2-year intraday highs on 12/28/10 and remains bullish. SPX closed above 2-year closing price highs on Wednesday 12/22/10, reconfirming its preexisting major uptrend.

S&P 500 Cash Index Potential Resistance
1576.09, high of 10/11/2007
1552.76, high of 10/31/2007
1523.57, high of 12/11/2007
1498.85, high of 12/26/2007
1440.24, high of 5/19/2008
1406.32, high of 5/29/2008
1381.50, Fibonacci 78.6% of 2007-2009 range
1366.59, high of 6/17/2008
1335.63, high of 6/25/2008
1313.15, high of 8/11/2008
1274.42, high of 9/8/2008

S&P 500 Cash Index Potential Support
1251.48, low of 12/27/10
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1173.00, low of 11/16/10
1171.70, low of 10/27/10
1166.74, low of 10/20/10
1159.71, low of 10/19/10
1,151.41, low of 10/7/10
1,131.87, low of 10/4/10
1122.79, low of 9/23/2010
1114.63, low of 9/15/2010
1110.88, low of 9/10/2010
1091.15, low of 9/7/2010
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
1008.55, Fibonacci 38.2% of 2009-2010 range
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
943.29, Gann 50.0% of 2009-2010 range
878.04, Fibonacci 61.8% of 2009-2010 range
874.17, Gann 62.5% of 2009-2010 range
869.32, low of 7/8/2009
805.17, Gann 75.0% of 2009-2010 range
785.13, Fibonacci 78.6% of 2009-2010 range
666.79, intraday low of 3/6/2009

One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol

3.29% Silver Trust iS, SLV
1.63% Gold Shares S.T., GLD
1.52% Indonesia MV, IDX
1.07% Commodity Tracking, DBC
0.84% South Korea Index, EWY
0.80% South Africa Index, EZA
0.74% Singapore Index, EWS
0.74% Japan Index, EWJ
0.73% Natural Resource iS GS, IGE
0.73% Thailand MSCI iS, THD
0.69% Canada Index, EWC
0.69% Agriculture DB PS, DBA
0.65% Switzerland Index, EWL
0.62% Metals & Mining SPDR, XME
0.60% Pacific VIPERs, VPL
0.52% Oil, Crude, U.S. Oil Fund, USO
0.49% Energy Global, IXC
0.44% Energy DJ, IYE
0.42% Austria Index, EWO
0.40% REIT VIPERs, VNQ
0.40% Real Estate US DJ, IYR
0.37% Energy SPDR, XLE
0.37% Energy VIPERs, VDE
0.35% Utilities SPDR, XLU
0.34% Realty Cohen & Steers, ICF
0.32% Pacific ex-Japan, EPP
0.31% REIT Wilshire, RWR
0.31% Global 100, IOO
0.28% Australia Index, EWA
0.27% Consumer Staples SPDR, XLP
0.25% Dividend International, PID
0.23% Financial Preferred, PGF
0.22% Utilities VIPERs, VPU
0.22% Basic Materials DJ US, IYM
0.22% DIAMONDS (DJIA), DIA
0.22% Value LargeCap Dynamic PS, PWV
0.21% LargeCap Blend S&P 100, OEF
0.21% Materials SPDR, XLB
0.20% Value S&P 500 B, IVE
0.19% Value VIPERs, VTV
0.19% Russia MV, RSX
0.14% S&P 500 SPDRs LargeCap Blend, SPY
0.12% Dividend SPDR, SDY
0.11% Dividend Appreciation Vipers, VIG
0.11% S&P 500 iS LargeCap Blend, IVV
0.11% Brazil Index, EWZ
0.10% LargeCap 1000 R, IWB
0.10% Dividend DJ Select, DVY
0.09% Blend Total Market VIPERs, VTI
0.09% LargeCap VIPERs, VV
0.09% Bond Ex-US Treas, BWX
0.09% EAFE Index, EFA
0.09% Financial Services DJ, IYG
0.09% Emerging Markets, EEM
0.09% Emerging VIPERs, VWO
0.07% Financial DJ US, IYF
0.06% Health Care SPDR, XLV
0.06% Value 1000 Russell, IWD
0.06% Financials VIPERs, VFH
0.05% LargeCap Blend Russell 3000, IWV
0.05% Netherlands Index, EWN
0.04% Emerging 50 BLDRS, ADRE
0.04% Value EAFE MSCI, EFV
0.04% Bond Treasury Short-Term iS, SHV
0.02% Growth EAFE MSCI, EFG
0.02% Technology DJ US, IYW
0.01% Financial SPDR, XLF
0.00% Dividend High Yield Equity PS, PEY
0.00% Growth S&P 500/BARRA, IVW
0.00% LargeCap Blend S&P=Weight R, RSP
0.00% Malaysia Index, EWM
0.00% Taiwan Index, EWT
-0.02% Growth 1000 Russell, IWF
-0.04% Value SmallCap Russell 2000, IWN
-0.04% Transportation Av DJ, IYT
-0.05% Value MidCap S&P 400 B, IJJ
-0.06% Industrial SPDR, XLI
-0.07% Growth VIPERs, VUG
-0.07% Value MidCap Russell, IWS
-0.07% Value SmallCap S&P 600, RZV
-0.08% Capital Markets KWB ST, KCE
-0.11% Info Tech VIPERs, VGT
-0.12% Global ex US ACWI iS, ACWX
-0.12% United Kingdom Index, EWU
-0.12% Technology SPDR, XLK
-0.12% Value SmallCap VIPERS, VBR
-0.13% Europe 350 S&P Index, IEV
-0.13% Mexico Index, EWW
-0.17% Small Cap EAFE MSCI iS, SCZ
-0.17% Latin Am 40, ILF
-0.18% Growth LargeCap NASDAQ 100, QQQQ
-0.19% European VIPERs, VGK
-0.19% Value SmallCap S&P 600 B, IJS
-0.20% SmallCap S&P 600, IJR
-0.20% India PS, PIN
-0.21% MidCap Russell, IWR
-0.21% MidCap S&P 400 SPDRs, MDY
-0.21% Consumer Discretionary SPDR, XLY
-0.21% Bond, 1-3 Year Treasury, SHY
-0.24% Growth MidCap 400 B, IJK
-0.24% Microcap Russell, IWC
-0.24% MidCap S&P 400 iS, IJH
-0.27% Small Cap VIPERs, VB
-0.28% SmallCap Russell 2000, IWM
-0.28% Growth MidCap Russell, IWP
-0.29% EMU Europe Index, EZU
-0.30% Growth BARRA Small Cap 600, IJT
-0.30% Telecom DJ US, IYZ
-0.31% Belgium Index, EWK
-0.34% Germany Index, EWG
-0.35% Bond, High-Yield Junk, JNK
-0.35% India Earnings WTree, EPI
-0.37% Italy Index, EWI
-0.38% WilderHill Clean Energy PS, PBW
-0.39% Networking, IGN
-0.41% Growth SmallCap VIPERs, VBK
-0.41% Semiconductor iS IGW, SOXX
-0.44% Semiconductor SPDR, XSD
-0.44% Spain Index, EWP
-0.45% France Index, EWQ
-0.46% Growth SmallCap R 2000, IWO
-0.48% Hong Kong Index, EWH
-0.52% Preferred Stock iS, PFF
-0.53% China LargeCap Growth G D H USX PS, PGJ
-0.56% Bond EmrgMkt JPM iS, EMB
-0.58% Bond, High-Yield Corporate, HYG
-0.60% Bond Muni ATM-Free S&P iS, MUB
-0.61% Biotech SPDR, XBI
-0.63% Water Resources, PHO
-0.65% Chile MSCI iS, ECH
-0.79% Turkey MSCI iS, TUR
-0.83% Sweden Index, EWD
-0.84% China 25 iS, FXI
-0.91% Bond, Aggregate, AGG
-0.99% Bond, TIPS, TIP
-1.02% Homebuilders SPDR, XHB
-1.19% Bond, Corp, LQD
-1.31% Bond, 10 Year Treasury, IEF
-2.29% Bond, 20+ Years Treasury, TLT