Friday, January 05, 2007

Gold Price Made a Low at 601.30 Buy Gold Now

I probably ought to hang up my hat and never write another daily commentary. Yesterday I wrote that "if [gold] breaks 618,look for a fall through the last low close (614) all the way to 600. If so, 'twill happen fast, and rebound just as fast."

Today the GOLD PRICE dropped $19.00, made a low at 601.30, and closed at 604.90.

Of the SILVER PRICE I wrote yesterday, "The bottom of silver's trading channel lies around 1175 - 1150, so that's as far as I can see it falling. But firstit must fall through strong support at 1240 - 1250. Another downside target is the 200 day moving average at 1218, close to 1225 support and the bottom Bollinger Band at 1202. Watch alertly for volatile silver to drop very fast in the next 2-3 days and recover just as fast."

Today silver dropped 59.7 cents, made a low at 1203, and closed at 1213.

Folks, I am not that accurate, so don't expect this every day.Now, what should we expect from here, and what's causing it? The US Dollar index closed up 29 basis points today, and up 100 basis points from last Friday. It broke out over the last high at 84.22 and is targeting 86 - 86.50 from here. That's not the cause of gold's fall, but it flows along with the same current of events & speeds them along.

The cause of gold's drop, technically is the need to finish out the final leg of the correction that began 1 December 2006. The gold price made a huge move last year, topped in May at 720, and then spent from May through November correcting,as did silver. What's driving gold & silver prices is the long term depreciation of the US dollar, & the economic havoc the "managers" of that currency have caused. Until all those toxins are flushed from the economy's body, it will undergo one fever after another, declining all the way.

Both silver and gold prices are near their bottoms. They may drop sharply one or two more days, but today's recoveries point out the lesson these bull markets have been teaching us: they won't stay down long. Expect another short, sharp correction, then 8 - 10 days of strength-gathering before they rally again. Buy gold and silver now. If you don't want to buy at these prices, then keep your eye peeled & buy if they fall. Most of all, don't let the hope of hitting the perfect price at the bottom paralyze you. Buy now.

STOCKS are looking pretty peaked, and today fell through the first minor support at 12,400. We may have already seen the Dow's high, or it may poke up a bit higher, but now we are entering the frustrating phase where stocks are rolling over to the downside, up one day, down the next, always running into overhead resistance, always disappointing. Take this gift the market is handing you, and swap stocks for silver & gold.

The DOW IN GOLD DOLLARS shot up on today's gold weakness to G$425 (20.56 oz). There remains the remote possibility that it will climb all the way to the halfway point at G$475 (22.98 oz), but first it must beat stiffer resistance at G$436 (21.09 oz). A close above G$436 would signal a run for G$475.

Things I would have nightmares about if I had nightmares: the possibility that I am dead wrong about everything. The Gold/Silver ratio rallies back to 75, and the Dow in Gold Dollars rallies to G$555 (26.85 oz). Silver falls and gold stagnates and erodes. Three years pass before the bull market resumes in force. Stocks continue to gain, but always much less than inflation. The US Government apologizes for all the trouble it has caused trying to re-make the world; the Federal Reserve board apologizes for robbing the American people and the world for the last 94 years and votes to abolish itself. Venus fly traps apologize to flies.

Like I said, a nightmare -- dreams. Said just to let you know that no matter how well you think you have scoped things out,"pride goeth before a fall." I think about it, 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.