Thursday, August 26, 2010

Silver prices now rising faster than gold


August is usually a quiet month in the precious metals market but this month is different. Silver has started behaving 100 per cent like a precious metal and not as an industrial commodity, and while stocks and Dr Copper have been falling, silver has been outperforming gold which is also on the up.

What is going on here? This is actually fully consistent with the bullion market rumors about the bank cartel unwinding its silver futures positions in the quietest month of the year.

You would expect gold to be falling a little with stocks under pressure. It is not. And you would expect silver to be selling off even more strongly because it is an industrial commodity as well as a precious metal. But it is not.

Does that mean that the gold price is being set up for a serious spike, and that silver will not only follow but outperform in these fireworks? Without the ability to look under the hood of the silver market – and the suspicion is that the market supply is nothing like what the market supposes – we are still in the dark.

But spot the price breakout. Silver is above $19 this morning. Gold is closing on $1,250. If this trend continues then $1,650 gold by next February could well be accompanied by $30 silver.

Silver Market up before options expiration

David Morgan discusses the recent rise in the silver here