I was too cautious in my last Gold and Silver Market updates, and yesterday’s dramatic developments proved me wrong. I was right about one thing, however, and that was that we were at a very important inflexion point. What happened on Tuesday was immensely important for both the oil and precious metals sectors, and for the dollar which dramatically crashed a strong zone of support, which I had expected to at least generate a bounce, as it was so important.

What happened yesterday was super bullish for the oil and precious metal sectors. The dollar took out the support at its lows of late January and early February and at its 50-day moving average. Gold vaulted above strong resistance at the $428 level and its falling 50-day moving average. The HUI index dramatically bust through strong resistance in the 210 area. Silver was not so hot, but it was much more overbought than gold following its strong advance earlier in the month.

There was also an exceedingly important development in the oil sector. Crude bust out above $50 for the first time since October, thus, at a stroke, eliminating the danger of a Head-and-Shoulders top. This was a very important development not just for the oil sector but for the precious metals sector as well, because major bull markets in the precious metals are should be accompanied by a major bull market in the energy sector. Oil stocks have reached overbought extremes in recent weeks, although in exceptional circumstances an overbought condition such as this can persist for a considerable time with prices going even higher. Oil stocks, which tend to move ahead of oil itself, can be said to have forecast the breakout by oil itself.

Now everything - gold, silver, oil, oil stocks, is moving ahead in tandem - a most propitious situation. There are several fundamental reasons for oil to rise in the time ahead. Obviously a resumption of the larger downtrend in the dollar will fuel a rise, but in addition to this there is believed to be an increasingly tight supply situation. As long-time subscribers of my site know, a year ago I indicated that some kind of attack on Iran and Syria was not a matter of if, but when, as part of the rolling takeover of the mid-east. Recently, as we all know, the propaganda against Iran, very similar to that generated before the invasion of Iraq, has been cranked up. Scott Ritter came out a few days ago and said that Bush "has already signed off on an attack/bombing of Iran in June of this year, which probably explains why Bush is over in Europe now passing the hat round, as the European politicians are likely to be in a less generous mood once the bombs start falling on Iran. Such action will clearly have a bullish effect on oil prices, and quite possibly on the precious metals, as the consequences of an attack on Iran are likely to be considerably more serious, to the perpetrators and their "allies" than has thus far been the case with Iraq.