Thursday, October 12, 2006

Both Gold and Silver Turned Up This Week

One rose doth not a summer make, nor doth one week a change of trend.

However, both the SILVER PRICE and GOLD PRICE turned up this week, and with more significance than might appear on the face of it. With today's gold price close, both metals have climbed above resistance that has imprisoned them so far during this move, 1120 and 575. If they can hold above these levels tomorrow, then there's another argument in favour of a bottom having already occurred. Meanwhile, the silver price needs to close over 1220 and gold over 680 to confirm a trend change (by the time that happens, your chance to buy cheap will be a long-gone, wistful memory). We may see further downside in both metals before the end of November, as low as 525 and 1000. But for now silver's support at 1075 and gold's support at 560 are holding.

The US DOLLAR broke out over 86 this week and in 4 days ran to 87.20. Shorts were complacent. It should race now for 91.

The DOW JONES INDUSTRIALS AVERAGE, it seems obvious, will hit 12,000, probably later today or tomorrow. This will occasion great shouting, bragging, and chest thumping amongst those who sell stocks -- and well it ought to. If you had an occasion like that to shuck your dying investment off onto the sucker public, wouldn't you take it? Be wary, and look: new highs in the Dow do not take the DOW IN GOLD DOLLARS to new highs. Interesting. The highest the DiG$ might reach is (from my viewpoint) G$475 (22.98 oz.). Swap stocks for silver and gold. Do yourself a favour.

One of the best arguments favouring silver and gold right now is the generally negative sentiment. Combine that with today's positive price action, and you've got a great place to buy. Remember that corrections must progress through price, time, and sentiment. The first two have pretty well been satisfied, and now sentiment must reach a low before the market can turnaround. Therefore, when you here gurus talking about the end of the commodity bull market and a stronger dollar and other pie-in-the-sky ideas, just ask yourself one question: is the US government about to stop inflating the dollar?

If the answer is yes, then sell your silver & gold and buy stocks & bonds. If the answer is "Not a snowball's chance in Hades, unless of course three asteroids hit Washington, DC simultaneously", then swap stocks for silver and gold, stop your ears, and sit tight.

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

- Franklin Sanders, The Moneychanger

"Buy Silver and Gold Coins at the Best Prices"

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.