80'S HAIR BAND ANTHEMS – DESTINY LOST
Long-time readers of the blog know that I have shared some of my deepest thoughts and closely held dreams. As you know, before I became a blogger and market watcher I wished to live the care-free life of an 80's hair band lead guitarist. Shredding on my flying V, wearing leather pants and studded arm bracelets, and causing my loyal fans to head bang in rhythm could certainly be listed as my greatest desires in life. This week's market news reminded me of those memories of long ago and I recalled the song of a band I didn't like that much. These guys weren't hardcore like me, but they were obviously big time and therefore were able to define the 80's heavy metal movement. Speaking of heavy metal, what is up with silver?
TIME TO EXIT?
Silver has been the beneficiary of a wonderful 10% rally this week. Anytime we get a significant move like this we need to take a moment to examine the sustainability of the action and determine if we should capture gains and move on. Examine the chart below to see the nice bounce off of support near $26, powerful move through the triangle, and gap higher to $29.75. Resistance is at the $31 to $32 area above.
SILVER:GOLD RATIO - Chart
The Silver/Gold ratio looks to me pretty fairly valued as an eye-ball's view show that 16 is about the average and we are currently about 18. One could argue that we'll see a further climb to 22 but I think that is about as high as we'll get in this move.
It is odd that silver would break out this week considering it is the first week in many that the stock markets have shown some weakness. The Dow is actually down about 170 points for the week and SPX is down a little more than one half a percent. In this world of "all assets move higher together" one has to wonder what is really going on.
Yesterday we were able to read the "stale" Fed minutes that revealed that the benevolent money masters still remain vigilant and willing to "Pour Some Money on Me" as Def Leppard would sing. The notion that despite a powerful rally in the markets that have propelled them near record highs is still not enough to side-line the Fed is more than enough reason to push metals higher.
I heard another overture of the rehashed rumor that China is going to announce that silver would become a significant backer of their currency reserves and thus this was the reason for the powerful upswing in silver pricing. I'm not so sure I believe it as it has be said over and over again.
ROMNEY LOVES BERNANKE TOO
Perhaps the move in metals was the announcement from Glenn Hubbard, Romney's economic adviser, that Bernanke would be asked to stay if his candidate were elected. The notion that Romney and Obama would keep the counterfeiter-in-chief at the helm of the Fed is probably more reason than any that the metals markets all have ripped higher in the past week.
So without waiting any further, let's join the banks, the markets, the metals, the Democrats, and the Republicans in signing the Fed's newest anthem…."Pour Some Money On Me"
Goatmug is an investor that cares about you and your family. Goatmug's Blog – Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/