Well, it wasn't within the first hour of Globex trading as we suggested was possible last night, but gold has cleared $1600, and more importantly, silver has vaulted through $40.
We'll start off with silver as frankly we're even more impressed with silver's current price action than gold's.
Silver has traded as high as $40.56 this morning, up over a dollar from Friday's close (nearly 3%!).
Silver sliced through $40 like a machete through half-melted butter. The lack of resistance seen at $40 was frankly astonishing. We expected the cartel to put up much stronger resistance, as a convincing push through $40 confirms that silver's lows for the correction are in at $32.05. This is likely the result of no POMO $ left for the plunge protection team (cartel) to attack gold/silver due to the drain of funds while the debt limit negotiations near 0 hour. (also notice the DOW's action today without POMO support)
Silver is now set up to run to the mid $40's in a flash. It's quite possible that you will never see $30 silver again.
For all the doubters, clearly The Doc's $70 silver by the end of 2011 call is still in play.
Don't even think of whining to us that you missed buying silver below $40, you had 2 solid months to accumulate silver in the low-mid $30's. As we have stated numerous times, in 18-24 months, people will be DREAMING of buying silver in the low-mid $30's
Also of note, the silver/gold ratio has now tightened below 40:1 to 39.58:1. As gold breaks out and challenges $1650, look for this ratio to continue to tighten significantly. In other words, look for silver to outperform gold in the near future as it has some catching up to do thanks to May's massive smack-down.
Gold has now crossed the significant $1600 mark. It has not yet cleared the level significantly however, we would like to see gold close closer to $1605-$1610 today for some comfort. If it cannot pull this off, look for a retest of the breakout and old all-time nominal high of $1577. $1600 is a significant psychological number, and barring an immediate complete melt-down in either Euroland or the US debt limit negotiations, we should see somewhat of a battle for $1600 gold (unlike the COMPLETE LACK OF RESISTANCE for silver at $40).
Expect an even larger battle at Sinclair's major angel of $1650.