Tuesday, November 14, 2006

Silver and Gold Remain Out of Synch

Did SILVER AND GOLD fool me last Friday into believing they had broken out upside? Highly possible. I should have followed my own rule and insisted on a new high gold close, & not just a close over 630. Silver & gold remain out of synch. It seems that weak gold is having its spine stiffened by stubborn silver, which refuses to break 1280. Today gold dropped as low as 618 and snapped back to close down only 40 cents at 623.80. Silver traded as low as 1270. In the aftermarket silver is trading at 1283 bit gold has dropped to 621.80, so we may see lower prices yet before their minds clear & silver & gold prices get back in step. Still, Thursday's performance warns us how fast metals can and will move, so I'd still be buying at these prices.

GOLD/SILVER RATIO traders are sitting tight, snug on big piles of silver that we bought with gold when the ratio was 53 - 56. We're waiting for a spectacular move, so wait patiently.

Today I'll tell y'all something that may sound contradictory, but is not, namely, I think stocks may have a wild parabolic rally yet not gain any ground against gold. Why? Because I'm staring at the DOW IN GOLD DOLLARS chart, which measures the Dow's performance in gold, and its rally that began last July appears to have spent itself. Huff, huff, huff, flat on its back out of breath. The DiG$ would have to climb to G$433 (20.95 oz) & above to change my mind, from today's G$406.17 (19.65 oz). Looks to have topped and begun to fall again.

However the Dow closed at a new high today, which raises the odds that it will blow off vertically. Crazy moves like this can do most anything, but as I said a month or more past, we might see a blow off top that carries to 12,750 or so. This will be the shorting opportunity of all shorting opportunities. If you haven't yet swapped stocks for silver & gold, it's time for that, too.

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.