Silver joins the party

It's taken its time, but silver has finally joined the party, breaking the downtrend line from its April high as well as its 200-day moving average.

Gold, which is now above its May 2006 high, continues to rise with remarkable momentum despite being overbought, as indicated by an RSI above 80. Although there are no further peaks to provide resistance on the way to 1980's all-time high, it may not be long before the yellow pauses to digest its considerable gains since the breakout at the beginning of this month.

Looks like those short GDX are hurting as they scramble to cover their positions, leaving gaps on the daily chart. If these are exhaustion gaps, as they appear to be, they will be filled sooner rather than later.

Meanwhile, the GDX:$GOLD ratio is rising, indicating that the mining stocks are leading the metal again, which is typical of a strong rally.

With its urgent 50-basis-point cut in the Fed funds rate, the U.S. Federal Reserve may have put the final nail in the coffin of the U.S. dollar. On Thursday, the index came within 2/100ths of a point of its all-time low, 78.43 in 1992 -- the last bulwark against the abyss.

Apres Greenspan, le deluge.