SILVER (FINALLY!) PLAYING CATCH-UP TO GOLD

After months in the gutter, the poor mans gold is finally movin on up. Silver popped nicely, rallying nearly 7.5 % from low to high over the past two weeks, beating golds 4.8% gain.No longergetting solidly trounced by its richer cousin, silver is striking back.Inlast weeks blogwe discussed just how cheap silver (and platinum) were vis--vis gold. While certainly less so now (see chart below), silver remains extremely undervalued relative to gold.

The gold / silver ratio has dropped a little more than 6 full points in the past week, falling from a high just north of 93 ounces of silver to purchase one ounce of gold, to just under 87. Could this be the big gold/silver reset weve been expecting? It may be too early to tell, but well take the 6-day pop in silver whatever the cause.

Data Source: FutureSource

In last weeks blog we identified $16.20 per ounce as a key level for silver. That level was taken out on Friday. Mondays close of $16.41 roughly 20 cents higher than Friday puts our $17.50 near-term objective in play. However, it could take a bit of work to get there.Silvers slow decline was marked by multiple periods of consolidation. Each of these consolidations established key resistance levels. Silver needs rally above all of them before we can consider it explosive again. Rallies Friday and Monday were a good start.

Given the multiple levels of resistance currently above the market,RMB Group trading customers who took our suggestion in ourJuly 2ndblogto by December $16.00 / $17.00 or December $16.50 / $17.50 bull call spreads in the 5,000-ounce COMEX silver options may want to consider exiting half of your positions and taking your original risk off the table.The spreads settled Monday for $2,090 and $1,565 respectively. Continue to hold the balance for a potential move to our first objective of $17.50.

Data Source: Reuters

Please be advised that you need a futures account to trade the markets in this post. TheRMB Grouphas been helping its clientele trade futures and options since 1991 and are very familiar with all kinds of option strategies. Call us toll-free at800-345-7026or312-373-4970(direct) for more information and/or to open a trading account. Or visit our website atwww.rmbgroup.com.

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The RMB Group

222 South Riverside Plaza, Suite 1200, Chicago, IL 60606

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