Targets for gold and silver are rising. The gold breakout looks real, but there is still some reason to be cautious. We may be near a turn on the dollar, which so far this year has not materialized. But the Dollar Index is finally down to 75 and now that the ECB has made their expected rate hike to 1.25%, we may see the Euro back off. Then again, we may not.

And even if the dollar does rally, will that be bad for gold? There hasn’t been such a strong correlation of late. One thing to note is how the dollar has not acted like a safe haven in recent weeks. Revolutions and natural and man-made disasters have not caused a flight into the dollar. In fact, even with sovereign debt problems making Europe look bad again, the Euro rallied!

Here is some reading for the weekend:

[1] http://expectedreturnsblog.com/is-gold-rising-because-of-inflation/

[2] http://www.gata.org/node/9789

[3] http://pragcap.com/the-boj-answers-the-trillion-dollar-question-what-is-causing-the-commodity-rally

[4] http://moneymorning.com/2011/04/08/second-quarter-forecast-three-predictions-three-ways-to-profit/

This last one is very thoughtful and makes the case that stocks will rally for a while longer. The end of QE2 will be harsh, but we’re not there yet. The risk-on trade is still in play. Let’s see how far gold and silver go this month.