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« A Comeback for Gold-Backed Money? | Main | The Driver for Gold You’re Not Watching »

Gold and Silver Still Dollar Dependent

USD Chart 11 March 2011.JPG

Despite the troubles in the Middle East and its ramifications for oil prices the real driving force behind both silver and gold prices is still the US Dollar. The inverse relationship remains intact and as the dollar tries once again to get some traction, gold and silver prices are capped. This raises the question of just why is the dollar popular at the moment, well, as we see it the downgrading of Spain’s debt has cast another shadow over the stability of the Euro. When the Euro dithers and sags, the dollar becomes a beneficiary for those looking elsewhere to place their cash. The stay of execution for the dollar arrives in the nick of time as it flirts dangerously close to the '76' level as depicted on the above chart.

Oil prices appear to be softening as WTI eases back towards the $100.00/bbl level thus lessening the pressure on inflation and supposedly lessening the need to hold gold.

The USD has managed to bounce at the '76' level, for now, however, both the 50mda and the 200dma are forming a steeper curve as they head south. The technical indicators are climbing out of the oversold zone, with the RSI, MACD and the STO all heading north. A short term rally could be on the cards but we doubt that it will have the legs to make any real progress.


Gold Chart 11 March 2011.JPG

A quick look at gold shows a recent new all time high which bodes well for gold prices despite the pullback. The 50dma and the 200dma are moving up in support of gold prices, with the RSI, MACD and the STO having peaked and turned negative for now. In the short term we must expect the unexpected with severe oscillations in both directions, however, longer term this bull market is intact and heading for much higher ground.


Silver Chart 11 March 2011.JPG

Physical silver continues to be difficult to obtain and has led to silver prices being chased ever higher. We may see some sideways consolidation here, however, its a tiny market and could rocket at any given time as both the industrial and investment demand increases. The technical indicators are on the ceiling at the moment suggesting a breather, but don't count on it, they can stay that way for prolonged periods of time.

In conclusion we would suggest that a core position is held regardless of what day to day, or week to week events arrive to rattle everyone's cage. Keep some metal in your own hands and certainly outwith the banking system, the troubles that we see on our screens today could be ours tomorrow. When choosing stocks go for the quality producers as many of the names you see today will not make a cent in this bull market. Finally, if you have the stomach for it and are comfortable with the inherent risks involved, a few well thought out option trades could boost your portfolios performance, but keep it low level.

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

Our model portfolio is up 138.05% since inception, Average return of 41.27% per trade, 67 closed trades, 65 closed at a profit or a 97% success rate. Average trade open for 43.21 days.

sk chart 19 Feb 2011.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

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Reader Comments (6)

All indicators are bearish. At least it's going to 50MA here. Bulls have not a single point in a favour of a trend continuation.
And btw, despite the USD's bullish indicators, it still can drop to 62 in 2012, but this year it is going to hold I think.

March 12, 2011 | Unregistered CommenterDi


March 12, 2011 | Unregistered CommenterRoger Levinson

"Bulls have not a single point in a favour of a trend continuation" The Blind leading no one with a thinking cranium. I'm no expert but biologist Snakeman can see the "big picture" clear as day. Di, you live in fantasyland. You have been and will be proved wrong again and again. Again, look into those flavored shorts at Fruit Of The Loom. You will never go hungry.
You are preaching to the wrong choir.

March 12, 2011 | Unregistered CommenterSnakeman

I was surfing net for some gold and silver articles when I got your site and found your articles very unique and interesting.
Will definitely visit this website more.

March 15, 2011 | Unregistered Commenterinvesting in gold

The People's Bank of China (PBOC), the central bank, announced today that it will issue more gold and silver commemorative coins featuring the giant pandas to meet soaring demands for precious metals!

June 20, 2011 | Unregistered CommenterPat

Good for them!

June 21, 2011 | Unregistered CommenterGold Prices

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