Archive for 01/12/2010

Levels

Now that Thanksgiving has passed, and the end of November, we can reasonably conclude the true sentiment of the markets has reasserted itself. And that looks a lot like what I wrote about last week: risk aversion due to Europe and Korea, with the dollar and gold rising together. Equities look like they are correcting. Mining stocks are tracking gold more than general equities, as they started to do earlier this year. But still , they could suffer some weakness if equities swoon.

Today it looks like the Euro dipped below 1.3, a significant milestone in its descent from the 1.43 peak in early November. If the Euro bounces, the dollar would then drop and people are expecting that to be even more impetus than the Euro, though in all fairness, recent gold strength has been driven by Euro issues and so dollar weakness may not have the anticipated large effect, at least in the short-term. Speaking of which, the dollar got above 80 and is now above 81, while gold is getting close to $1400 again.

And silver is strong. It broke above $28 yesterday and looks like it will challenge its recent $29.35 top.

What are the chances gold and silver will correct? Fairly high. But it looks like corrections will be shallow.

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