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8/23/2012 3:56 PM
By Charles Payne, CEO & Principal Analyst
Yesterday, the Fed minutes hinted that more money-printing isn't off the table, and while stocks yawned, the metals market got that wink and a nod and took off. Gold, of course, is being watched by everyone as this has been its toughest year since it reversed in 2001 and never looked back. There was also a bullish piece in the Journal yesterday pointing out all the players looking for the rally to resume after a 13% correction.
Silver was lost in this discussion.
Considered the poor man's gold, silver didn't correct with gold, it crashed after a meteoric rally lifted it to $50 an ounce. I'm bullish on gold because inflationary forces are deep-seeded already and will only gain with efforts to revive western economies (they should try real educational reform, cutting welfare benefits, cutting regulations and encouraging investment ... just a thought).
Yesterday silver broke through $30.00, which had been something of a resistance point and now it's gaining momentum. It's also north of its 100-day moving average, a historic buy signal. From here, the next leg lifts the precious metal to $33.00. The big test comes at $37.00.
The Pro Shares Ultra Silver (AGQ) is the best way to play this breakout.
By the way, some of that money-printing by central banks will go into industrial projects and that also helps silver, which actually has practical applications beyond being a store of value. In the meantime, the gold-silver ratio is so far off historic norms. In the past, 20 ounces of silver got you an ounce of gold. At today's prices it would put gold at $600 an ounce or could mean silver should be closer to $83 an ounce.
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