Is this a breakout for precious metals?

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Front page article on MarketWatch.com this morning titled: Gold Revs Up. The point of the article is that gold has broken out of a month long trading range of $860 to $910 and is now trading close to $930. Silver has had a nice two day move, but is still trading about the same as 30 days ago.

There are a couple of points I take from the MarketWatch article. First the technical analyst types are looking for a price breakout if gold can top $940 or have successive closes above $920 (different analysts!). The other point is higher oil and a weaker dollar can only drive gold higher, and the dollar especially seems to have no way to turn around at this point. The soft economy will have the Fed keep interest rates low, continuing the erosion of the greenback.

On the silver front, it appears that a true break to the higher side has not yet occurred, but I have to believe that the gold break out is nothing but positive for higher silver prices. Some of the silver mining stocks have made impressive gains over the last couple of days. Silver Wheaton, SLW, has gained 15%, Pan American Silver, PAAS, has also gained 15%, and Hecla Mining, HL has added 23% in the last 3 days. Over the same time period the S&P 500 index has shed almost 4% of it’s value.

At this time, either as a hedge against a stock portfolio or as a primary investment, silver holdings appear to be a good place for further gains.

Tags: Market Update