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Louise Yamada - Expect $85 Silver & Tremendous Inflation

With continued volatility in gold and silver, King World News interviewed legendary technical analyst Louise Yamada of Technical Research Advisors. When asked about the action in the metals markets Louise remarked, “Gold continues to be in an uptrend in our work. You had a little bit of a consolidation, seasonality would suggest a rise into the fall. The primary support level remains at $1,475...Our next target is $2,000, and we did a gold special in our last piece that suggested from a very long-term perspective...we could see $5,200 on gold.”

Louise Yamada continues:

Regarding silver specifically Yamada remarked, “We hit part of our silver targets at $50, (expect) $65, even $80, $85 over time. We had an 88% rally in a very short period of time from January and a one third retracement, 34% down, so that was pretty normal. We saw some support at $33 and would loved to have seen it go sideways a little bit longer to be honest with you.”

When asked about inflation and strength in commodities Louise replied, “I think what’s interesting is that the CCI (Continuous Commodity Index) is right above 600, that level is now support. It moved through the 2008 peak and is consolidating above that peak, which is perfectly normal, it does not look like a secondary top.

We’ve had a couple of markets including Mexico that have moved out to the 2008 peaks and are just simply moving sideways above it. You can look at something like palladium, which is doing exactly the same thing above $700, copper doing exactly the same thing above 400 after moving through the 2008 peak and platinum in a consolidation....

Continue reading the Louise Yamada interview below...

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“So it makes sense that you are seeing the CCI also in a sideways move. You could easily see the CCI move towards 800 and higher over the long-term. Of course we anticipate inflationary forces as you know coming into what we call consumer essentials, food, water and energy.

So the energy is a part of this and the food is a part of this, but it won’t eliminate the volatility that you continue to see in grains. Longer-term progression, especially if we see more water shortages is that agricultural products are going to move higher.”

When asked about her thoughts on the US dollar index Yamada had this to say, “I think that one of the observations that one has to take into consideration is that with each of the Euro financial crises and our own financial crisis in 2008 to 2009, the dollar has rallied less!

In other words you had a rally in 2009 that carried 25%, then in early 2010 the rally was only 19% and the second one in 2010 was only 7% and this time you haven’t even seen 7% with the crisis that has evolved. So that suggests to us that it (the dollar) is becoming less and less considered a really safe haven. Bear in mind that the 80 level for the US dollar is a major 34 year resistance level now having broken down through that in 2006, 2007. So our longer-term declining dollar profile remains in place.”

Louise Yamada was Managing Director and Head of Technical Research at Smith Barney (Citigroup). Her career there spanned 25 years where she was a perennial leader in the Institutional Investor poll, and she was the top-ranked market technician in 2001, 2002, 2003 and 2004 before starting her own firm LYA in 2005.

Louise discussed gold, silver, commodities, the stock markets and much more at length. The KWN interview with Louise Yamada will be available shortly and you can listen to it by CLICKING HERE.

Eric King

KingWorldNews.com

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July 25, 2011

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