Gold shot up to a brand new record high in US Dollar terms in today’s session as it continues moving higher on its own merits. It did not especially matter what the Euro or the Dollar seemed to be doing today as both were rather quiet compared to recent volatility that has marked those pits; nevertheless, gold powered through the capping efforts of the banks at $1,250 on good volume forcing some of the fresh shorts encouraged by some CTA’s and other advisory newsletters out of the market. It would seem that gold is becoming a star in its own right as crude oil was tame today as was the bond market and the equity markets. In other words, the typical “outside influences” were missing that tend to impact gold leaving the larger macroeconomic forces the main factor in gold’s performance. Clearly investors who have deep misgivings about the current state of the global economy, particularly the West and its increasingly unsustainable burden of indebtedness, want to own the metal.

Silver saw additional upside follow through after yesterday’s breaking out from its congestion zone with the market in a technical position to mount a challenge of the $20 zone.

With both gold and silver moving higher alongside the HUI, metals bulls are pleased to see the train carrying all the passengers in the same direction for a change. I might add here that the HUI is outperforming gold on a percentage basis today but pretty much in sync with silver on that same percentage basis. It looks like some of those ratio spreads are being lifted off of the gold/gold shares trade which is encouraging particularly since the S&P 500 is not especially strong today. We might just be seeing some preliminary signs that the profitability of that trade is coming to an end for the hedgies. From looking at the chart, it does appear that the HUI will need to take out 500 – 502 in a big way to see a much larger unwinding of those trades. If it does, and that is going to be tough resistance, the shares will more than likely see much sharper gains as a goodly amount of those short legs are going to be in deep trouble.

See the ratio >JSMineset.com