Monday, April 4, 2011

04.04.2011

BREAKOUT DAY!






Video above explains it all



Very good breakout day today as the market is holding up very well. Late afternoon the market found great support where the 18 period average of highs and is looking to move higher for Tuesday. When you find support at the moving average line, then that is technical analysis by the book, however when it finds support at the 18 period average of highs then this has super strength. Standard strength if at the 18 period close and not as strong if it is on the average of lows. Based on the length of this Fibonacci if the breakout would take is to around $39.60 as the next expected target on the hourly chart as this exceeds the $39.33 figure mentioned earlier in the video putting more emphasize now towards $39.50 to be the area the market finds key resistance for the short term.



Gold to Silver Ratio


The silver price again continues to rise against the price of gold as the ratio is now moving towards 37 and the Gold/MG is currently moving towards 840. The entire rally from August has been dominated by silver as it has had tremendous gains priced in Gold. When Silver broke out above the $17.75 level on August 24, 2010 the price of Gold was $1230 and thus the ratio was 69.3 and gold has now lost over 46% with the drop in the ratio and now silver almost doubling it's value against he price of gold. When the Gold to Silver ratio reaches 34.7 then it will be up 100% in the Gold/Mg chart. We have seen Silver do a little big better than double priced in fiat USA debt notes and the price of Gold has almost made 20%. In my opinion I do not see any reason to play this chart to go higher, with the exception of hedging based on the trend being your friend. The trend is clearly higher on the silver priced in gold and there is no signs of it slowing down. When I visited my coin dealer on Thursday, he offered to trade me up on the gold to silver ratio by giving me gold for silver as he was saying that it's hard to sell gold and easy to sell silver. Because of this, I am not making the trade as of yet, and feel the ratio can fall into the 20s with a silver push up to $50. A move to $50 from todays levels of $38.60 is only a $11.40 gain or around 30%. If Silver has that gain, it might be safe to assume gold only gaining 6% and thus trading at $1,500. The ratio there would 30 to 1 and the earliest I would consider playing a dead cat bounce. A dead cat bounce is when you buy when a chart is down so much so that you can get it's quick gains. As the Gold to Silver ratio keeps dropping, it is safe to say that the trend will reverse and a pattern of higher highs and lows will occur on the gold to silver ratio. I don't think this will start until it at least tests 30 and maybe even 20. When Silver reaches $50.00 per ounce, I will most likely look to buy a 5 gram gold piece with silver as a small purchase for the dead cat bounce. My early outlook is a little more with a move over $72.00 for Silver for that of trading silver for gold as a way to play the correction in Silver. Overall, I am staying in silver for the reasons of how money is created and the reason I am profit taking silver peaks in gold is because of the matter of being wrong that I have an asset class that is going to increase in value (albeit lower than silver). If I am right and the ratio goes from 20 to 30, I can buy back the silver cheaper.


VOLATILITY



Although long term volatility is about to explode through the roof, on the short term it is the polar opposite of such a case. The volatility is very low and this lower volatility is making the market slowly move higher. We had some very low volatility back in September, and it'll be interesting to see a chart similar to this over the last eight months so. Good thing I can make such thing, but not tonight. This will be the last post tonight. The lower volatility we are seeing today is telling me that the sellers are a lot less aggressive then they normally are, with many participants playing in the sidelines and if this trend continues, this index should remain below nine and keep going lower setting up higher gains. If the silver market has some gains on higher volatility in the next few days or weeks with the volatility movements increasing, this maybe signs for an intermediate term correction. However if we extend the new 31 year high gains with this index remaining and staying below 12 would indicate to me that we have further upside to go or corrections through time.




If you want to put a video on my blog regarding silver, please let me know and I can put it up for you. If you see any video on the internet that you think should be put up then send me a youtube message and I can put one there. What I will do is put at lesat one video a day on the blog. This video below is from Cyrus992 talking about the silver market, oil and more. Enjoy



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