Turk: “This year it is not Mexico in the headlines, but rather Greece that is ready to default. Of course the other big news item coming up this summer is the Federal Reserve’s announced intention to end QE2. It’s amazing that so many market participants are taking the Federal Reserve at their word.
All one has to do is look at how much money the US government is borrowing and what they intend to borrow in the future to meet their spending needs to clearly understand that the Federal Reserve is going to keep buying the US government’s paper. This is the point that John Williams made clear in his KWN interview.
I think we have to be prepared for tremendous volatility and the possibility that this summer could be a repeat of 1982 where gold took off to the upside in a major way. Gold became the go to asset in the summer of ’82 that everyone wanted to own.
The extraordinary rally in the summer of 1982 began in the second week of June and by the first week of September gold has risen 50%. That’s a 50% move in less than three months!”
When asked about silver specifically Turk replied, “The gold/silver ratio has climbed back into the 40’s, and from a technical point of view is very close to achieving my mid-40’s target. That suggests to me that silver’s low is in place. My only concern here Eric is that this is options expiry week. We know from past experience that the shorts try to keep precious metals prices from rising to have as many possible calls expire out of the money.
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