Metals Update: Silver over $43, Gold Nears $1500

Posted by Adam Sharp - Monday, April 18th, 2011

The bull market in metals marches on. Silver dipped to $42.30 in early trading Monday. 

But as investors weighed that big S&P downgrade on America's credit outlook, the metal found a strong bid around the $43/ounce level.

At last check silver was was up $.33 to $43.38. Chart of today's action:

silver 43
Source: Kitco.com

The move in silver has been breathtaking. Busting through resistance levels left and right, and generally taking no prisoners.

As the latest breakout unfolded less than three months ago, when silver was around $27, we mentioned $37.50 as a possible near-term upside target. It's 60% higher today.

Warning, warning

Surging precious metal prices are a flashing neon billboard about the economy, desperately trying to tell us something.

What it means depends on who you listen to.

Some say it means a bunch of crazy goldbugs have created a speculative bubble, which is bound to pop as the world recovery takes off and interest rates rise.

Others say it's creeping doubt about the world's governments and central banks, specifically in their ability and desire to contain inflation, and deal with debt. Needless to say, we're in this camp.

The printing has not yet begun. Loose monetary policy may continue a decade or more. Doves (aka advocates of money-printing) are still firmly in control at the Fed. And in D.C.

Occasional bleating from Fed "hawks", who boldly say that we need to tighten up a bit, eventually, but not yet, gets a fair amount of media play. It's meaningless. Watch Bernanke, and Dudley, and Yellen. That's it. They run the show.

Until they change their tune (and mean it) the liquidity will flow. QE3 will likely proceed several months after QE2 ends in June. Probably after a correction in stocks and belt-tightening by consumers.

When that happens, the Fed will point to the slightest hint of deflation and say another round of easing is necessary. Noooo, things are getting cheaper! Not allowed. Oh, what's that you say about stagnant wages? Nah-nah-nah-nah-nah-nah, I'm not listening.

That's how I see things playing out, anyway.

Gold

Nice action in gold today, as we approach the psychologically important $1500 level. A pullback near-term, as the metal bounces up against resistance at the arbitrary, yet important, number. But the bears haven't been able to mount much of a defense lately, so we'll see.

gold 1500 dollars
Source: Kitco.com

Interesting PM links I came across today:

Telegraph:

"We view silver as gold on steroids"

Silver is a better bet than gold in the current precious metals bull run and has been described as "gold on steroids" by one asset manager.

Brian Ostroff, the managing director of Windermere Capital, a Canadian investment firm, said he was bullish about the prospects for all precious metals because the world's central banks were printing money. But he was particularly upbeat about silver.

Silver CoinsToday:

US Mint Silver Proof Set Suspensions Rise to Four

The United States Mint on Monday added two more silver sets to its suspension list, bringing the total to four. It was just over a week ago when the bureau first halted two silver sets as silver prices raced to a new 31-year high of over $40 an ounce.

CNN Money:

Gold and silver shot up Monday after the credit rating agency spooked Wall Street by revising its outlook for the United States' debt to "negative."

Updated 4/18/2011 9:19PM EST.

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