Friday, January 19, 2007

Gold Likely to Close Above 650

This week's GOLD PRICE chart is a strange one. It broke out straight up through 620, went sideways between 630 & 636, then slammed straight down to 626, only to roar straight up again through 630 today and close at 635.50 today, a new high for the move.

I know very smart people, whom I respect, are calling for another spike down, but this week's trading simply exemplified strength and resilience to me. If gold close below 622, then we will see more downside. However, more likely is a close above 650.00 which will send all the short and the Nice Government Men running for cover & confirm that (1) the bottom hath been seen and (2) the rally hath begun.

Odd, the SILVER PRICE finished the week behind gold -- up, but a paltry few cents rather than gold's ten bucks & 1.9%. That gives the old ticker a check -- just skip a beat, then run right along -- but still silver not only finished the week in positive territory, it also closed above 1280, which has been critical resistance. Far's I can see, silver is set for a rally next week, unless it closes below 1250, which would be the first sign of trouble, followed immediately by further troublous signs. But wait! That's not what I expect to see. A close above 1315 (the last high) would stop the mouths of croakers, nay-sayers, & silver-fiends, & announce to the world that silver is rallying.

Except for gold, platinum, and palladium, this week spoke out of both sides of its mouth. But equivocation, as we all know, is no excuse. If you don't speak up right & proper, the answer is no, or I don't know.

Here, y'all, is a perfect example why I will never be a guru, internet, broadcast, or print. The Dow today closed off 8.25 points and the S&P 500 up a negligible 3.68. But what to my incredulous & unbelieving eyes should appear in the "" remarks right next to those quotes on "Stocks are off their afternoon highs but holding onto the bulk of their gains [sic] going into the close."
Durned! I thought, I must be blind as a bat. Looked like stocks were down to me, or at best sideways. I rolled out a chart of the last 5 days' Dow trading. Again, what to my wondering eyes should appear, but a peak in the middle and a graph falling like eight tiny reindeer shot with a 30 ought six at close range with dum-dums.

Somebody's Christmas elf doesn't go all the way to the North Pole. Plain as can be, the Dow peaked on Wednesday with a 12,614 intraday high, closed lower, retried to rise but failed with an intraday high of 12,612, then fell the rest of the week. Today it twice fell through support at 12,540, but scrabbled back up. Now whether you want to this week's action a "key reversal" [break into new high territory with a lower close for the day followed by a lower close the next day] or whether you choose to call it a "double top [two days' failure at 12,614 followed by successively lower closes] doesn't matter to me, but whatever it is, it ain't
"holding onto the bulk of their gains."

Mercy! I'll never make a guru. I don't know enough about compost, and they deal wholesale in its prime ingredient.

Anyway, class, what do y'all call a series of lower highs & lower lows? That's right, a downtrend. And that is what the DOW IN GOLD DOLLARS has drawn on the chart, failing this week at critical G$425 (20.56 oz) resistance. Stocks will lose more ground against silver and gold, it appears. Therefore, unless you are a Wall St. guru, what would you do? That's right, swap stocks for silver & gold. We probably have not yet seen the high on stocks (look for 12,650) but are entering a correction of a week or two. Next high should be the last, then le deluge.

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.