Price declines are almost always disheartening to investors and that is true whether the decline is simply a dip in a bull market or a full fledged bear market. Successful investors are able to hold on during the dips and enjoy the big gains that unfold over the course of a bull market. To help define dips, technical analysts have devised a number of tools that help them hold on so they benefit from recoveries.

One of these tools applies Fibonacci ratios to help understand what a dip should look like. This idea is based on the work of Charles Dow, who developed the Dow Jones Industrial Average in the late 1800s. Dow noted that markets trend over different time frames and a down move lasting several months is commonly seen in up trends that last for years. He said countertrend moves often retrace a third to a half of the previous upward progress.

Despite another surge in strength for the dollar against the euro, metals and crude oil prices are higher this morning.

Gold is up $5.95 in early trading to $1,547.90 and silver is up $0.13 to $27.44, raising the silver/gold ratio to 56.4.

The run on European banks continues today only it’s not just Greek bank customers withdrawing euros, but also customers of Bankia SA in Spain who have pulled out over a billion euros in just under a week.

Throughout history and around the world, investors have turned to gold in times of turmoil. In the short-term, gold can become volatile and fall when investors think it should rise, but over the long-term gold has delivered on its promise of preserving wealth. Two recent examples highlight the unchanging economic principle that gold shines in a crisis.

Readers of the largest selling newspaper in Germany woke up to a headline in Bild, considered one of the country’s most influential newspapers, that ominously warned “Inflations-Alarm.” The article included such alarming phrases as “How quickly will our money be eaten up?” and “Millions in Germany are worried: Inflation is returning!”

This was the paper’s reaction to an announcement from the German central bank that the country must accept inflation that is higher than the average rate experienced in the Eurozone. This sacrifice is necessary to help other counties recover, and the statement indicated that inflation was likely to stay under 3 percent. Many Germans still fear a repeat of the hyperinflation that devastated their country in the 1920s and the newspaper tapped into this sentiment.

European stock markets counted more losses today and the dollar gained more ground on the euro, dragging commodity prices down.

Gold is down $8.54 to $1,534.40 and silver is off $0.33 to $27.33, pushing the silver/gold ratio to a recent high of 56.1 as fear gives way to panic.

Stories are surfacing today about Greeks, fearing an exit from the euro, have started a run on banks, concerned about what might happen to their cash if the country returns to the drachma.  What makes this notable is that Greeks have been drawing money out of banks for months, but the steady stream has now turned into a flood.

It was a wild ride but it looks like the euro and gold have found some price footing after recent losses.

Gold was up $4.21 to $1,562.56 and silver up $0.25 to $28.45, leaving the silver/gold ratio right at 54.9. Platinum and palladium were also up, with copper and crude oil flat to lower.

The bleeding hasn’t completely stopped for the European stock market with the FTSE down another 0.19 percent, though the STOXX 50 and DAX both showed small gains on the day. In Asia the Nekkei posted another drop, leaving the index down on the month.

Sudden and broad based market declines tend to be triggered by liquidity crises. I noted this last week in “Derivatives May Explain Gold Selloff.” Shortly after that was posted, J. P. Morgan CEO Jamie Dimon admitted that the firm “screwed up” and was facing at least $2 billion in losses as a result of a series of bad trades in the derivatives market. Markets are interconnected and the chart seems to show that large banks and funds have been aggressively reducing positions in gold over the past two and a half months.

It’s going to be another tough day for investors.  European equity markets were a bloodbath today with the FTSE down over 2 percent as finance ministers openly plan for a Greek exit from the euro.

If you’ve ever tracked commodities prices during the initial phase of a crisis, you’ll notice gold and silver sink with the equity markets as investors scramble for cash.  That is just what we see today as gold is off $18.70 to $1,561.95 and silver is down $0.36 to $28.44, leaving the silver/gold ratio at 54.9.

If you want to know what a market panic looks like, take a good look around today.  Commodities are down by big margins almost across the board.  Gold, silver, crude oil, platinum, palladium, wheat and copper are all down; the only two commodities showing any strength are the odd combination of natural gas and lumber.

Recent global economic news has pointed towards slow growth and that has led some to believe that inflation will be subdued. But at least two central banks are still concerned about inflation risks. In their most recent meeting, the Bank of England stopped its quantitative easing program. This may turn out to be only a temporary pause, which would mirror the pace of actions taken by the US Federal Reserve. The Fed has engaged in at least two rounds of quantitative easing and many believe they are preparing a third round. The Bank of England is taking a more cautious approach while they assess the risk of inflation which reached 3.5 percent in March which was nearly double their official target of 2 percent.

It’s been a tough week for gold and prices are down again this morning as money flows out of European stock markets.

Gold is down another $8.20 to $1,585.20 and silver is off $0.34 to $28.68, bringing the silver/gold ratio to 55.

Commodities are down across the board even though the euro rebounded slightly against the dollar. Besides gold and silver, platinum, palladium, crude oil, and copper are all down. Investors are fleeing to cash like a stampeding herd as fear replaces rationality.