Could this be right?

23/11/2010 by Philinje.

Here is how the markets look in this moment of risk aversion:

Gold is spiking because of Euro weakness, which means dollar strength, which is being driven up by safe haven buying, and clearly that applies to gold as well. So gold and the dollar are both going up. It may be that the Euro is coming back to exert more influence on gold than the dollar.

Equities could be turning over for a decline, but that may not be too severe. It seems that expert opinion is shifting toward the view that equities will rally into early next year. But maybe they have a correction coming first.

Silver is looking very strong. We might get a few wobbly moves lower by midday Friday, when the US markets close for Thanksgiving weekend, but chances are that will be it before some big moves up.

Mining stocks on the other hand might be rolling over with equities. But if gold and silver are going up, any decline in mining stocks will be muted. Anyway, there may be a month or so of a correction for the mining stocks, and that could be the last great buying opportunity for them.

If the dollar gets past 80 on the dollar index, there could be more upside. But it no longer looks like that will damage gold and silver.

All of this is speculation, of course. The latest scare in Korea might blow over in a day or two, and then next week equities could get back onto their recent rally. Then, if the dollar drops, gold might do ok but silver will probably do better. So either way, silver is a good bet, and gold is not bad and less volatile.

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