Gold and Silver Going Out of Limelight?

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Many commodities are retreating this morning, as the US equity markets continue their gravity defying rally. Many analysts have been calling for a consolidation or pullback, but we here at Lido Isle Advisors sense the equity markets are in trend mode, and see no reason to call a top. We believe the next key target for the SP 500 is 1530, and if the market gets up there, we will reassess our views.  The MAR13 emini Sp 500 is up again today, trading up 1.5 pts or +.1%.  

The Nikkei is actually the biggest gainer of the major world equity markets, trading up 190 points, or 1.7%, as the Yen’s weakness resurfaces today after a dead-cat bounce on Friday.

The main energy markets which have been very strong recently are retracing some gains this morning, with heating oil down just $.57 and RBOB gasoline down a bit more, trading down $1.76. Heating oil may still have a lot of room to run, especially considering the length of the big Northeastern storm is unknown. Crude oil futures (MAR13) are up slightly today, trading up $.51 at $96.24. We see the only reason for crude to rally beyond $100 is if some geo-political tensions with oil producing countries outside the US re-enter the reality.

We focus more on precious metals today, specifically silver. MAR13 silver futures are trading down $.39, or -1.24%. We included a chart to show that the top of the recent range in silver is $35.50. Since hitting that level last fall, silver has steadily been in a downtrend, and we expect this to continue until silver hits our target of $27.50. With the money coming into the equities market, propelling the SP 500 to 1500 and beyond, we don’t see the gold and silver markets being very bullish this year.

Silver is still holding above a key uptrend line dating back to last summer, but if silver can break below this line, we will look for $27.50 to be hit, and then silver may head lower from there.