muses of the moment

May 4, 2011

Silver correction

Filed under: Dollar Crisis, Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 11:32 am

Click here for Jesse’s latest commentary with charts. We have a buying opportunity in the silver market, but only if you are buying physical silver to hold long-term. Do not day trade silver unless you have money to lose.

Check out the silver chart Jesse created. The lowest support is at $39 at the moment. This is more of the type of correction gg was looking for. Could correct to $26-28.

This dip is a buying opportunity.

Silver will go to at least $450 before it is all over, probably in the next 5 years, gg thinks closer to $500. The paper price will be broken and physical will not be available at any price. With this big picture in mind, buying at $39 or $26 makes very little difference in long-term profit. If you are nervous about buying silver, then wait 60 days and see where the price is. Or buy some now and then again in 60 days.

USDollar is taking another drive this morning to 72.75. It can’t seem to stay above 73 for more than a few hours. 73.30 is the resistance. Just broke through its support at 72.80.

Interview with John Williams

The Gold Report interviewed John Williams from shadowstats.com (written text). Click here.

TGR:The U.S., even in recession, is still the largest consuming economy. If the U.S. continues in, or goes into a deeper, recession, doesn’t that impact the rest of the world?

JW:If the U.S. is in a severe recession, it will have a significant negative economic impact on the global economy. That doesn’t necessarily affect the relative values of other currencies to the USD. If you look at the dollar against the stronger currencies, a wide variety of factors are in effect—including relative economic strength. The U.S. is probably going to have an economy as bad as any major country will have, with higher relative inflation. The weaker the relative economy and the stronger the relative inflation, the weaker will be the dollar. Relative to fiscal stability, the worse the fiscal circumstance in the U.S., the weaker is the dollar. Relative to trade balance, the bigger the trade deficit is, the weaker the currency. As to interest rates, the lower the relative interest rates in the U.S., the weaker will be the dollar.

Part of the weakness in the dollar now is due to the way the world views what’s happening in Washington and the ability of the government to control itself. That’s a factor that may have forced S&P to make a comment. So, even having a weaker economy in Europe would not necessarily lead to relative dollar strength.

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