Since the S&Ps got back to their typical 10 point swing higher, low volume POMO-type day, I will move on to discuss my favorite asset right now – Silver.
As you know by now, my focus has been squarely on the US Dollar and the demand for assets like gold and silver. The dollar has now breached the first level of support at 77, and it may be only a matter of days/hours until we see a test of the November lows of 75.23.
So folks, as that happens only one thing can offset that decline, and that is consumption of something real. Gold should break out of its recent consolidation near 1,410 and start to test the highs around 1,430. Once clear of that, I see no stopping it until 1,650, which should happen sometime this spring.
Silver, however, is already telling us it’s going higher. In fact, according to CNBC (for what that’s worth) silver is demanded 30% above what is actually available. In other words, too many folks want in and can’t get in. This demand is from ETFs, industrial producers, speculators, etc. and the final price could reach $50/oz. before we see any equilibrium in supply and demand.
So for now, my intermediate-term focus is on Silver. The following chart shows the March pivots and where support and resistance is likely to come into play. I suspect we will see little bull flags all the way up as the suckers give up their holdings for the institutions to pile in. Again and again.
Watch the dollar and keep an eye on SIL, EXK, AGQ and SLW (I am long each of these).
Trade well and trade the extremes!