Dollar Index for timing

29/04/2011 by Philinje.

I thought about what I said about May 12 or 13,  and I think there is a better way to time a top in gold and silver.

Just look at the Dollar Index - when it gets to 70, that’s probably it. That was the all-time low a few years ago, the last time gold peaked in March 08. So like silver and mining stocks, the dollar is finally coming back to its previous low (high for the others). But gold and silver are much higher today than they were back then, and silver is finally getting to its all-time high in 1980.

Gold is looking quite healthy right here. Whereas silver was leading the charge in recent weeks, now the leadership might shift to gold. The monthly pattern is for prices to firm up around end of month and make some strong moves early in the new month, so at minimum we should see what happens next Monday/Tuesday.

Anyway, when the Dollar Index hits 70, chance are it will bounce, and a normal correction in gold would take it down to the mid 1400’s potentially - though there is no guarantee of that given how strong gold has been. Some folks are seeing a higher high in June, so this near-term correction might be brief and shallow.

Price targets remain in the high $1500’s for gold and possible above $51 for silver. Then maybe $1600 + and $60 in June.

Here is some useful reading. This article provides downside targets for silver, assuming a large correction occurs soon:

http://pragcap.com/downside-targets-for-silver

The conclusion is a possible bottom at $33 - 34.

Here is an interesting piece about how silver is not yet parabolic, bsaed on momemtum or price velocity:

http://www.skoptionstrading.com/updates/2011/4/26/think-silver-has-gone-parabolic-1980-was-5-times-faster.html

Here is a good oveview on silver that covers all the bases and provides a useful tip at the end:

http://moneymorning.com/2011/04/29/the-/

Sprott Physical Silver Trust (PLSV) sounds like an excellent way to invest in silver.

Posted in Gold | Print | No Comments »