As we can see from the above chart Silver is leading the way so far this year
closely followed by gold, precious metals stocks, the dollar in fourth place and the DOW heading south for now.
Silver has come from a negative position to show more than a 25% gain this year which is terrific news and brings some relief to silver bugs as silver trades at $14.43 as we write.
Gold is in second place having made new all time highs in many currencies and is currently trading at $991.70 as we write. Despite the drop off in demand from the jewelry sector the void has been more than filled by safe haven buyers along with a few speculators. The speculators may well decide to take some profits at this juncture so a slight pull back may be on the cards.
The precious metal producing stocks have almost doubled since they bottomed late last year which is an excellent recovery in such a short time frame. However they do have a long way to go in order to emulate their previous highs, but they are heading in the right direction. On closer inspection we can see that some of the stocks are now taking a breather which is to be expected.
Today the DOW dropped 250 points to close at 7114, thus penetrating a previous important support level. If it does not recovery in the next day or so then the broader market could well be in for another battering taking it down by 15% to 20%, to around the 5700 level. Our tiny sector could be the baby in the bath water once again as this sort of carnage does not take prisoners. If the physical metal can hold its ground and continue to garner more attention in the mainstream media then we could be the sector to run to if and when the cat hits the fan.
At this point we just don't know which way it will go. However we intend to hold on tight to what we have acquired as we believe this bull market is getting hotter by the day and when the mania phase kicks in it will be fast and furious dwarfing all previous record highs.
Have a good one.
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