Tuesday, December 19, 2006

Gold Price Fall may have Ended Yesterday

I hold back from saying that GOLD and SILVER PRICES have done all their falling because they have only been falling for three days. Yet the decline has been short & sharp, and the Christmas holiday looms. Silver has dropped below its 50 DMA (12.84) and yesterday bounced off support that runs from 1200 to 1235. If it falls further the 200 DMA stands at 1205 to catch it. Yes, silver recovered somewhat today, but not above significant resistance/support. If you intend to buy silver on this reaction, your time is running out. Tarry not, neither wait forever.

Yesterday may have been the end of gold's fall when it hit that 612 area, which is crowded not only by support but also by the 50 and 200 day moving averages. From today's reaction, there are plenty of enthusiastic buyers at the 200 DMA. Also the bottom rising trend line seems to cross about 610. What I would like to see for both metals is a touch back tomorrow to 610 and 1235, turning around into a higher close. On the other hand, a close below those points would signal lower prices coming.

The GOLD/SILVER RATIO has climbed above the 50 DMA (48.65) but not reached the 200 DMA at 51.38. That last is the maximum point I expect to see. If perchance anyone was waiting to swap gold for silver, better do it now. No more chances.

The US DOLLAR INDEX took a 55 basis point hit today, but now looks as if it has set off on a rally of sorts, with this qualifying as the first correction. It will next have to better 84.40 to maintain an uptrend, so watch for that. A fall below 83 would indicate a change of direction to the downside.

STOCKS are toying with investors, refusing to make any more progress on their breakout over 12,350. I still expect this rally to top out by 12,750 or 13,000 at most. Looking at the DOW IN GOLD DOLLARS we find that yesterday it peaked at that G$417 - 418 (20.22 oz) resistance and then dropped today to G$414.61. Stocks still are failing to perform strongly against gold, leading to the obvious conclusion: swap stocks for silver & gold.

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.