Tuesday, September 12, 2006

Gold Price Shows Strong Support at 575 -580

Last Thursday, September 7, I noted that there were two possible interpretations of the silver & gold markets: "Well, we have lurched from one twofold possibility to another.

First, here's what I believe is happening: silver and gold tried to break out and have failed. That will send gold down below 600 & silver to 1075 or so, from whence they will come roaring back." Today saw those breaks. GOLD traded as low as 582.40 & SILVER 11.02. They closed at US$590 & 1110.8

Ponder -- think, O think ye -- about what hath taken place.

The GOLD PRICE shows strong support on the chart at 575 - 580, and the 200 day moving average (DMA) stands at 589.36. Lesser support holds around 590. Last time gold revisited its 200 DMA it only touched it during the day's trading, then took off. I have been targeting the 200 DMA to buy for some time. Scary as it is to buy after four days' dropping prices, if you don't stick to targets you'll never buy anything. Rather, you'll weasel and find an excuse to wait for lower prices every single time. And if a reversion to a 200 day moving average in a BULL market is not a place to buy, well, let's just fold up the tents and steal off into the night, 'cause there's nothing left for us to do here.

Same holds true for the SILVER PRICE. From several different angles a drop below 1100 must be a buying target, among them the 200 DMA at 1089. 'Twas from the 1080 platform the last silver advance was launched. I would buy at 1080, a break you will probably see this week, if you ever see it. Tomorrow both metals may bounce against today's long fall, and then fall again. Obviously huge support undergirds gold at 585. Silver, on the other hand, found all its new friends turn traitor and run. Ahh, hedge funds are so fickle. To drop more than 105 in one day asks for a little more downside. However, if you choose to wait silver out another day or two, better keep a sharp eye, Matey (as Long John Silver would say) because the bottoms in the last 6 months have been sharp and viciously short.

If you pass this one up, you'll have a story to tell your grandchildren about the "big one" you missed.

The DOW IN GOLD DOLLARS today reached G$400 (19.35 oz). You know, it's hard for me not to suspect that somebody big, some Nice Government Men, for an example, in a position to influence the market watch the DiG$. Y'all remember I mentioned in the last few days that it should shoot up to touch off its 200 DMA before it resumes free-falling. 200 DMA is now at G$391, so this touch fulfils my expectation.

Are you ready for this? Stocks gained (drum roll, please) a whole 4.73 points on the Dow, and 0.62 point on the S&P 500. Man, you have to stand back in admiration at that sort of power unleashed. This is the perfect time for you to swap stocks for silver & gold -- delay not!

The US DOLLAR index fell back two basis points trying to claw through 86. Lethargic, but seems to be resolving its coma by
awakening to the upside. Folks, this is it. This is the final leg down in the silver & gold correction that we've been waiting for. Sure, it might drop more, but if it does, I will only buy more. These are your targets -- now pull the trigger.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.