Friday, January 12, 2007

The Gold and Silver Price Correction Has Ended and the Rally Has Begun - Unless We See Closes Lower Than Today's

My fate between last week, with an incredibly accurate forecast, and this week, with the opposite of my expectation realized, reminds me of that medieval "Wheel of Fortune" where some people are riding up and some falling off. I really did expect we'd see one last spike down in the SILVER & GOLD PRICE, but a vicious short covering rally today dispelled that hope.

The SILVER PRICE closed over 1250, the pivot point I had been watching, then ran all the way to 1280 resistance. The GOLD PRICE smashed through 614, 618, 622, and 625.

It really has become awfully difficult to make an argument that silver and gold have not already bottomed. In fact, I won't make it. Unless we see closes lower than today's, the silver & gold correction has ended and the rally begun.

Next week both metals ought to step out smartly and rise, rise, rise, after the initial counter-attack by the shorts on Tuesday. Remember, Monday is a government holiday and markets won't be open.

The US DOLLAR INDEX approached its 50 day moving average and got slapped winded, as they say in the South. Still, it remains above 85, and will probably touch 86 before this little rally ends. Lo, trust not that weak reed, the US DOLLAR, which, if a man lean on it, will pierce him through the hand. Get out of US Dollar denominated investments now -- right now.

The DOW's high today only reached 12,561.04, still 20 points beneath the last intraday high, although another "new high close" occurred today. With yesterday's breakout to a new high, you would expect some spirited follow-through today, say, a 100 point rise at least, right? Didn't get it -- rose 41 points. How do you describe a market that breaks milestones but fails to run with the breakout? The W-word springs foremost to mind, as in "Weak."

Notice also that the DOW IN GOLD DOLLARS collapsed today, unable to pierce resistance at G$425 (20.56 oz) and falling back. That certainly hints loudly that Stocks aren't going to do much better against gold than they already have last year. The 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.