Tuesday, October 30, 2007

Stop, And Catch Your Breath

As October draws to a close, it appears this morning as if some legitimate profit taking is developing in the Precious Metals. Silver yesterday reached and surpassed our near-term projection at 14.43. Gold fell just shy of our 797 near-term projection. The potential for weakness in the metals over the next couple days is real.

Gold slipped under 785 overnight, and found resistance there trying to climb back through it. First support is at 778, with a move down to 771 not unexpected. Silver finally broke consolidation of the may 2006 top yesterday at 14.34. A retest over night has failed and a move back down to 14.00/10 would not be unexpected. A move back to the breakout at 13.84 should be looked at as a gift.

I've posted a chart of the often neglected Silver/Gold Ratio. This chart measures the strength of Silver relative to Gold. As you can see by the chart above it appears a double bottom has been established and that the ratio is now on the cusp of a breakout. Considering how far behind Silver has lagged Gold in this Fall's rally, it would not be surprising to see Silver begin to outperform Gold in percentage gains as we move towards the holidays.

No comments:

Post a Comment