Silver is a similar story to gold at present, although it has enjoyed a more significant rally since its brief plunge at the turn of the year. It has probably not escaped the notice of many interested in silver that it has had the habit over the past year of losing the gains of many weeks within the space of a couple of days, and if the dollar breaks higher here it is likely to do so again. The dollar is in a finely balanced position right now and is poised to make a significant move, probably this coming week, which is considered to be more likely to be up than down, for reasons set out in the Gold Market update. A break higher by the dollar is expected to precipitate a retest of the early January lows in the $6.35 by silver, with a possibility of a further fall to support in the $6 area, gold being expected to test its long-term upturned line now at about $410 at the same time. Such a move would result in an immediate break of important support by the precious metal stock indices, with the XAU index probably retreating swiftly to the 70 area. This scenario, and appropriate defensive action, were discussed in the last Marketwatch.
