Gold, Silver, and S&P500 Correlation Breakdown | Silver chooses to follow Gold rather than the S&P 500

The last few days have been all over the map, but it can be clearly seen that today resulted in Silver deciding to trade like a precious metal on the back drop of possibly the worst economy backdrop in the history modern economics. Watch for silver out performing gold over the next few months, including dropping less in a correction than gold.

Silver looks prime for break | Gold : Silver Ratio is looking pretty extended

Silver has just managed to start an uptrend with 2 days of higher highs.  I am expecting a rally to $42-$45.

Currently the Gold : Silver ratio is $1799.40/$39.03 = 46.1

 

Silver seems found its precious metal feel in starting in August 2010 with a rally from $17 to $30 by year end.  Silver stalled out in January but then quickly increased to around $48 at the end of April .  The sharp pull back that follow was perceived as a the "end to a bubble" by the mainstream media only to the $30-$32 range has held as support very well and is likely to be the low or a while.

Since the historic Gold : Silver ratio being around 16, this convergence will be of epic proportions.

Silver retraced 61.8% from the previous move which we can label Wave 1, this pull back has likely ended based on the bullish setup.  Candlestick pattern can be arguably considered a Morning Star.

The slow Stochatics is oversold and the MACD looks like it is rejecting the 0 level which will result the MACD line crossing the signal line over the next few days.

S&P 500 drop Recap and Marc Faber logically breaks down exactly what is wrong with the world economy and how to fix it

Zerohedge provides commentary + transcript of the interview

Ultimately the next 2-5 months will be an illusion, where a bounce in the economy is strictly due to technical levels (outlined in previous posts before the heavy selling came into the market: S&P 500 Analysis | August 2011 | Bear Market emerges  & S&P 500 Analysis | Long Term Outlook | Economic End of Days?).

Technical charts for S&P 500 July-August 2011, for analysis see the above links

July 27th, 2011

August 2nd, 2011

August 9th, 2011

 Things are getting real folks.  Metals one year from now are likely to be easily 30-50% higher especially gold, silver.

Yamana Gold Inc. | TSX : YRI | Technical Analysis: Huge upside potential

Yamana Gold Inc ( TSX : YRI ) has the potential to make a huge run.  This technical setup is almost so perfect that it raises some questions in my mind. 

I have not included any technical indicators in the chart above, however, I do want to note they all are arguably bullish.  The focus of the chart above is the break out of a triangle that formed since 2008. 
The upside potential if this leg is the same size as the previous up move is around $22-23.  However, it is likely if gold does get moving, $32 is not out of the question.   Also an interesting note if you take the same size move from the 2003 lows to the 2008 highs, the move exactly ends at the recapturing of the center line in the andrews pitch fork ( or channel lines).  Typically if this is the start of a bullish move, the price will be contained within the andrews pitchfork trend lines. typically oscillating around the center line.  This is an indication of how undervalued this stock really is.

The month has just started, however if the price can hold on and remain above the breakout level, this market could move very quickly to the upside.

Looking at another gold player Barrick, see how the center-line has already been captured, another piece of evidence to show how undervalued Yamana is.

Gold $ 1700 | Gold breaking to new highs | Precious metals rally of downgrade

Gold's natural reaction occurred as soon as the price started to trade.  Within 5 minutes over $20 gain.  The price is currently sitting at its all time high of 1695.50.

Hang on folks, you ain't seen nothing yet.  Other PMs jumped as well with Silver trading over 4% higher on the open. 
This is related to the US debt downgrade, along with instability in Euroland and in other parts of the world. We are witnessing history and there is a lot more surprises / certainties to come.  Keep focus on PMs as currency wars are heating up.

China adjusts currency peg, flexing muscles as an emerging leader and economic power.  
Bank of Japan intervenes in currency markets to devalue the Yen
ECB continues to buy large quatities of bonds all to help saving Ireland, Greece, Italy, Spain, Portugal, etc

Live Gold, Silver, Platinum, and Palladium below (Kitco.com)