With gold and silver hitting new highs, King World News hears from James Turk this time from London. When mentioning the bears in the metals market Turk commented, “Gold and silver are now poised for two big days in a row as we close out this week. The shorts are feeling the pain, but their pain is about to get much worse as the precious metals climb further.”

September 30, 2010

James Turk:

The metals opened strong here in Europe this morning, which is not too surprising given the news. The Irish government now estimates it will take EUR 35 billion to keep Anglo-Irish Bank solvent, up from the previous estimate of EUR 25 billion. Far more shocking is Ireland's finance minister announcement that the Irish government's budget deficit this year will rise to a phenomenal and unprecedented 32% of gross domestic product due to the soaring costs of bailing out its banking system.

As a measure of the heightened level of distress, the spread between German 10-year notes and Irish 10-year notes (and Portuguese 10-year notes too) have widened to another record. On top of this, Spain's debt is being downgraded.

So gold and silver are responding with higher prices as investors do their own bailouts - they are bailing out of the euro into the precious metals. But ironically, even more people are bailing out of the dollar because it is falling relative to the euro.

I don't like to make price forecasts for the short-term because it can distract one from the big picture, which is that the precious metals are in major long-term trends and should to be accumulated regardless of their current price because they remain good value, but my intuition tells me that we could see $23 silver before this week is out. A gold/silver ratio at 58, which I think is doable, means gold ends the week at $1335.