Tuesday, October 17, 2006

Further Support that Silver & Gold Have Bottomed

I am far, far too gracious (and modest) ever to employ those hated words, "I told you so." Therefore I will pass over in silence the repeated warnings you read somewhere that both silver and gold were liable to rise. (If any of you are interested the rhetorical device here is called praeteritio, to mention by listing as excluded. Your mother used it all the time.)

I went to Chattanooga, & gold and silver prices went berserk, on Friday. The GOLD PRICE jumped up through 575 resistance to 588.80, then closed today up another 5.90 to 594.70. What can I say? It is headed for 618 at least. The SILVER PRICE lagged not, neither did it fall behind. It closed on Friday up 30.3 cents at 1159.80, then rose another 23 cents to close today at 1182.80, on its way to 1200, perhaps even 1260.

All of this positive price action lends further support to the argument that silver & gold have already bottomed, although the jury will remain out until gold crosses 625 and silver 1250. Further downside is still possible, but not this week.

Here's one to tuck away in your mind permanently: in a bull market, always buy corrections. In a bear market, always sell rallies.

Against my expectation last Thursday, the Dow has not managed to pierce, or even touch, 12,000. If it does, it will burst upward briefly. It's inability to pierce 12,000 so far doesn't really say much. Even if it has strength enough to pierce it, resistance that psychologically huge would take some work to conquer. So the Dow's failure here could mean inward weakness (my interpretation) or it could amount to nothing more than condign hesitation at so large a barrier. I search the commentators to find some argument to gainsay my conclusions, but end up always thinking the same: swap stocks for silver & gold because this is your last chance.

The US DOLLAR INDEX hit its 200 DMA at 87.15 and crumpled. If it can recover quickly and climb quickly over 87 once again, then it has a shot for higher prices. Otherwise [make a slicing motion across your throat with your thumb].

The GOLD/SILVER RATIO isn't helping swappers. If it rises to 53:1, swap any remaining gold to silver. The DOW IN GOLD DOLLARS has not been awed by the strong Dow, but rather sank again today to G$416.45 (20.15 oz). It may not make the 50% fulcrum at G$473 after all, meaning stocks are even weaker than I think.

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.