“Former hedge fund manager William Fleckenstein believes that “it is a virtual certainty that the FOMC will unveil QE3, a third round of quantitative easing. And there is a reasonably higher probability that, whatever form this latest round takes, it will be fairly dramatic and involve a real commitment to more money printing” – and not just the operation twist.” http://wallstreetwindow.com/node/3583

http://resourceinvestingnews.com/21890-silver-the-perfect-alternative-to-gold.html

ONE of the questions investors have to ask themselves is, What is silver – an industrial metal or a precious one?

Possibly for the first time in the existence of the metal, the two may co-exist on relatively equal footing – which is why silver stocks are so appealing to investors at present.

This means news from explorers is now getting more attention. Read today’s article by Robin Bromby

Yesterday I had a roast duck lunch with Alex Papas a good Forex and general broker with long term (40 years) experience. His team includes a long term gold and resources broker. Below is my interpretation of how our conversation could be summarized ….

We discussed the effects of QE3. Essentially QE3 will further debase the US$’s value.

This will be a positive for gold, silver and many other commodities. It will also cause a rise in our AU$. This will most likely be good for our Australian commodity exporters but not so great for our industrials etc. (history will repeat)

His take was that it might be a good time, in ~ two weeks time, to start buying silver as he sees it as being cheap around the US$41 mark. He sees silver as being cheap because of the gold : silver ratio.

He also suggested that the gold bull will be done when the Dow = the gold price in US$. This last happened around ~1980…

The chart “Gold Market Price – Dow/Gold Relative Ratio” and the accompanying text (below in yellow) is quite interesting and seems to suggest that gold can either double from here or the Dow could halve. The trend seems to indicate the former.

Dow/Gold Relative Ratio

When we take the Dow Jones and divide it by the price of Gold we get an analysis tool called the Dow/Gold Ratio, which is comparing the markets directly and we can see which market is outperforming the other market. When the blue line heads higher, the Dow Jones is performing better, when the blue line heads lower, gold is performing better. In the short term this may not be so clear, but in the long term it can describe a very clear story.