Gold and Silver are Breaking Out…..

…..in Euro terms. Remind you of anyone? Well it is true. The ratio of Gold ($GLD) to the Euro ($FXE) is breaking a 13 month symmetrical triangle higher, as shown in the chart below. Consolidating the break higher at 1.32 it has a target from the pattern break to 1.51. If that move

happened solely from a move in Gold prices that would mean a move higher to about 1960 in the price of Gold. The indicators shown, Relative Strength Index (RSI) and Moving Average Convergence Divergence indicator (MACD), also support a move higher in the ratio. And the same thing is showing up in the ratio chart of Silver ($SLV) to the Euro, below, only this triangle is 6 months longer. The target for this pattern is to a ratio of 0.385 or over 50% higher, which would bring Silver back close to $50 if that solely drove the move. This chart looks like it needs a

consolidation first though with the RSI in overbought territory. $1960 for Gold and $50 for Silver. Wow! But of course these ratios can reach their targets by changes in the Euro as well. The thing is that as discussed last week in Euro and Dollar Are Focused on Draghi not Bernanke the Euro is moving higher, working against the ratio. Are you ready for new all time highs in these metals?

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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