Daily Market Update 4/21/11

GOLD
Gold closed today at $1,506.30 up $4.80 for the day. At one point during trading the gold price reached $1,509.40, another all-time record high. Gold continues to trade at lifetime highs above $1,500 for a fourth consecutive session on deep concerns over a sharply weaker dollar, tensions in the Arab world, worries about the euro zone crisis, and U.S. fiscal health. Investors are focusing on fears of the debasement of paper currencies amid rising inflation from China to Europe, and a warning by Standard & Poor’s that the US could lose its triple A credit rating.

SILVER
Silver continues to head higher, closing the day at $46.20, up $1.36 on very active trading.

GOLD/SILVER RATIOS
With silver trading above $46 per ounce the Gold/Silver ratio is around 32-to-1, very much in line with the average of historic ratios.

1792-1861, 16-to-1
I have seen market analysts quoting an historic 16-to-1 ratio (which occurred from 1792 to 1861 when Silver was $1.29 and Gold was $20.65) During the U.S. Civil War, gold and silver prices were very erratic.

1934-1967; 45-to-1
However, if we use the period from 1934 (the period after the 1933 gold confiscation) to 1967 (when the U.S. stopped exchanging gold and silver for paper dollars) the average Gold/Silver ratio was 45-to-1. Remember, they called in the US Silver Certificates and Nixon closed the Gold Window.

Based on this historic information I believe 30-to-1 is the right number to base your investment diversification.

Quote of the Day
Dennis Gartman, author of the Gartman Letter said "Panic dollar selling is setting in. This may carry farther than any of us dream of or, worse, have nightmares of."

For many of my clients and friends who are Gold & Silver addicts, I am now posting on Twitter multiple times during the day and night.