It's Not a Crash...

When prices are still up 45% (SLV) and 26% (GLD) over the past 12 months, I would call it a correction.

That's not to say it doesn't have risk to the downside (see Gold Prices Can Go Down).

Source: Yahoo Finance

Silver is Once Again on a Tear

Similar to gold (see a past post On the Value of Gold) silver has been on a tear due to low interest rates, fear of inflation, and a declining dollar (actually not similar to gold, but more like in multiples greater than gold). While the price of gold or silver is already a reflection of a weak dollar (i.e. if silver increases in price, it is outperforming the dollar), the relationship between the dollar index (relative to other currencies) and silver since the beginning of the year has been rather striking.



The warning note to the above is that while this relationship is not new, the scale of the relationship of ~10x since last summer, is (from 2007-mid 2010 it was closer to 2x).

Perhaps this time is different and we should simply be Ready to Ride the Golden Silver Bubble.

Source: Yahoo Finance

China Hearts Silver... Market Top?

FT Alphaville reports (via Bullion Vault dealers):

Looking at China’s latest import data, 2010 saw silver imports (net of exports) rise four-fold from 2009 note analysts at Mitsui in London – a total of 3,500 tonnes.

A heavy seller of silver bullion after lifting the state’s 50-year monopoly in 2000, China was a net export of 3,000 tonnes as recently as 2005.

Is this support for the massive 80% year over year jump in the price of silver under the belief that China will continue to be a huge buyer of silver? Or is this a sign that the price is bubblicious and investors should be concerned that China's economy will be forced into slow down mode (thus less net purchases) following the recent strong print in both growth and inflation?

Source: Yahoo Finance