Monday, December 04, 2006

Once the Gold Price Breaks 650 the Bears will Turn and Flee to their Dens

Both SILVER AND GOLD PRICES survived their touch back to support & have continued to advance. O, but why don't they climb faster? Why hasn't the gold price climbed through 650 yet? What's holding it back? A bull market climbs a wall of worry. Remember that. There are always reasons to doubt the validity of a rallying bull, but he keeps right on rising anyway. Listen, the correction lasted from May to November, and that was long enough. Both silver and gold prices are due and overdue to rally. Once the gold price breaks 650 the bears will turn and flee to their dens. The silver price has crossed 1400 and won't be held back.

You don't stand in the path of a market like this, you get long and then get longer. As long as the silver price holds 1325 and the gold price holds 637, the metals will continue rising. The silver price will hang up trying to pierce 1500 resistance, probably bounce off that spot, then pierce it on the next try. The gold price will mimic that performance at 720, but higher prices are coming for both.

The biggest story since I last commented Tuesday a week ago is the US DOLLAR INDEX's slide into oblivion. On 28 Nov. the buck was at 83.13, and today closed 70 basis points lower at 82.42, well on its way to my 80.50 target for this move. I have bled and pled since the dollar started this slide at 120 for y'all to get out of US dollar denominated assets. The dollar is destined for 60.

Stocks bounced back but are still trapped below 12,350 resistance. It's hard to explain this without sounding like I'm talking out of both sides of my mouth, but you do NOT want to own stocks, even though they may go higher, even 200 - 500 points higher (on the Dow), in the next couple of months. Why? Because they will come down hard, and keep coming down for years. Also, they will lose value against silver and gold for at least another 10 years. Therefore, you still ought to swap stocks for silver & gold.

The DOW IN GOLD DOLLARS (measuring stocks' performance against gold) is dropping lower and lower. Now it is hovering over its 200 DMA, and when it breaks that, look out below.

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.