Home > Uncategorized > Greece, Euro Zone Banks and Strange Price Machinations of Silver and Gold

Greece, Euro Zone Banks and Strange Price Machinations of Silver and Gold

Gold and Silver prices have bounced around wildly this past week. In light of the rumors of an imminent default on its debt by Greece, as well as the possibility that Moody’s will downgrade French banks as early as next week due to their exposure to Greek debt, it would seem almost inevitable that Gold and Silver prices would rise. That, however, has not been the case. Whether you believe that Silver and Gold prices are manipulated, or simply unpredictable, the current volatility can be disconcerting to many who have chosen to accumulate precious metals.

SilverDoctors and Sunshine Profits have some very insightful analysis into why the bull market in Gold and Silver aren’t over yet by any stretch of the imagination.

While SilverDoctors analysis looks primarily at the technicals of gold and silver over the past five years, Sunshine Profits examines the DJIA:Gold ratio and overlays the 1970’s Gold and Silver bull markets with the current bull markets. Of note in the Sunshine Profits analysis is that there may be one significant pullback left in Gold and Silver prices. 

For me, the money quote from the Sunshine Profits analysis is:

After a short comparison you might notice that today gold seems to be in a similar situation to where it was in 1975. This would suggest that we are in for a significant correction in the precious metals sector before the bull market resumes. It would also imply that any correction seen in the following month would not end the current bull.

Remember, the 1970’s bull market in Silver and Gold ran until 1979. If the current bull market parallels the previous bull market, then we may have four years left before this bull is over.

So, while the current price action in Gold and Silver may or may not make sense in light of the dire straights facing the Euro Zone – or the United States for that matter – keep your eye on the big macro and macroeconomic trends and not the short-term machinations of Silver and Gold Prices. This bull market has legs. 

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