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Silver Rallies Strongly!

I last posted about silver on 7/14, when I noted that a bottom seemed to be in.  Well – it was.  Silver has since rallied almost $2, from a $12.86 close Monday 7/13 to a current price of $14.69 on 8/5.  Additionally, it has outperformed its far more well-known and popular cousin gold during this period – up 14.2% vs. gold’s 4.8% move over the same period.  The ratio has dropped from 71.6 then to 65.7 today.   For a quick explaination of why I think this ratio is still ridiculously high, click my article at Silver Monthly and scroll down to the Silver:Gold Ratio section.

Meanwhile, the dollar has weakened considerably, for all the obvious reasons.  It now stands at 77.59 on the dollar index, vs. 80.08 on 7/13.  Here is a 2+ year chart of the dollar.

Going forward, and looking at this 2+ year chart of silver, it certainly seems like the early June highs of $16 are attainable in the next few weeks, but beware the stock market.  The S&P 500 is up 50% since the March lows, and ripe for a strong correction – after all, it’s not like the economy and employment are showing significant signs of strengthening.  Silver has rallied partly because of this mystifying economic optimism – industrial demand for silver would increase with a recovery.  If the stock market starts to fade, watch silver and the dollar closely.  Unless the dollar continues to weaken, silver would likely retreat alongside a market selloff.

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