GOLD

Alongside a drop of 2,700 point in the Dow Jones average since the beginning of February (10.3%), Gold has dropped $35 (2.5%) during the same period. With the exception of 2008, normally Gold would go in the opposite direction. What’s the problem? During the world’s equity sell-off, surprisingly the U.S. Dollar rallied 3% and interest rates moved higher on concerns about coming inflation. Regardless of what happens in the stock markets I don’t see Gold breaking down below $1,300 per ounce support level (with the exception of a short-term test). At 11am PST today, Gold is trading at $1,316 per ounce, down $3 on active volume.

SILVER

It is clear that Silver doesn’t have the inherent price support that Gold has right now. When Gold sells off, Silver sells off at a greater percentage. The only occasion that Silver increases at a higher percentage than Gold is when Gold breaks above a major resistance level. A Silver/Gold ratio of 81-to-1 is ridiculous when you have the Federal Reserve and economist talking about inflation coming back. At 11am PST today, Silver is down $0.18 per ounce, trading at $16.26 on excellent volume.