Tuesday, December 7th, 2010

Big Squeeze Is On in Gold and Silver

Gold and Silver swept all obstacles aside Monday, pushing already steep rallies into hyperdrive. Even a firm dollar failed to check the buying spree. At the opening bell, we were looking for Comex February Gold to surge to at least $1425; however, by day’s end it had done even better, rallying $24 to peak intraday at 1429.40. And although March Silver fell 11 cents shy of our minimum projection of 30.465, there was such power behind the nearly $1.00 rally that the target seems all but guaranteed to be reached during the night session. All of this must have come as bad news to technically oriented bears who saw a head-and-shoulders top forming in February Gold. Look at it now (in the chart below) and you’ll see that the last two days’ price action have transformed the pattern into chopped liver.