All-time high and silver probe

Currencies and equities came back to their breakdown level yesterday and currencies have been sagging again, while gold just about touched its all-time high just minutes ago, reaching $1224.  Silver jumped up again and is now above $19.

The mood seems to be skeptical. Another huge bailout - will that work? There are rumors about the Fed re-opening swap lines with Europe to enable buying of the Euro, ie, intervention. Intervention might cause a short squeeze in the near term, but ultimately the market will have its way.

It’s an interesting question whether gold will rise or fall or stay level with a falling dollar. Assuming the Euro gets defended, the dollar will drop. But does that mean gold will fall as the perceived need for a safe haven is lessened? Or will it move up or stay stable because the world is waking up to the massive money printing going on? Or will it rise along with commodities?

Regarding silver, the New York Post has followed up its recent piece about the whistleblower with this story:

http://www.nypost.com/p/news/business/feds_probing_jpmorgan_trades_in_gZzMvWBqOJpB55M7Rh9vwM

Apparently the CFTC is pursuing a civil probe and the Justice Department is pursuing a criminal probe into JP Morgan’s silver trading. Interesting. Could that have something to do with silver’s strange behavior of late? The past few days in silver look like perfect steps - absolutely flat until the next move straight up. After watching silver on a daily basis for the past few years, I can attest that this behavior is bizarre.

Anyway, gold and silver are the only commodities moving up and it seems they have some kind of fuel that is not so tied to the dollar or the equity markets. Could it be that the obvious recourse to money printing, now firmly reinforced by Euroland, is finally causing a broad exodus to gold and silver?

Well, investors in Europe will definitely see gold as an alternative to their currency. US investors, on the other hand, have the dollar as a safe haven. So the huge strength in Euro gold could be a big factor in gold’s strength.

Regarding my earlier post, it’s still possible that there will be another move up in equities shortly that could exceed Monday’s highs. It’s what happens after that that will be interesting. And keep in mind there could be some intervention in the Euro before too long.

This entry was posted on 11/05/2010 at 04:16 pm and is filed under Gold. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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