Wednesday, January 17, 2007

If You Have Been Waiting to Buy Silver and Gold, Stop Waiting

The SILVER & GOLD PRICES did what they were supposed to do today: they rose. Yet for full confirmation the correction has ended and the rally begun, silver needs to close above 1325 and gold over 650. If you have been waiting to buy silver and gold, stop waiting.

I was thinking today about the proper strategy for bull markets: get long and stay long. Don't fiddle around with trading in & out, just use every correction as an opportunity to add to your position. That's it. Not complex, not mind-stretching, but it still takes more discipline than most people have. They get scared out too easily.

Focus with me for a moment on the DOW Jones Industrial Average. Zoot alors! It climbed as high as 12,614 today, but closed lower than yesterday. Yes, y'all are right, & have been paying close attention -- that is the first half of a "key reversal." If it closes lower tomorrow, the Dow would have given us a very strong signal it will drop. Immediately. Y'all remember that a couple of months ago I said that the Dow's target was 12,650. High today was 12614. Of course, this may be just normal breath-catching in a rise, but I believe stocks are nearing the end of this rally. It will still take a while for them to turn over -- a market that huge doesn't turn on a dime, but the direction will soon be lower.

THE DOW IN GOLD DOLLARS dropped again today. What a useful & accurate indicator the DIG$ has been! It never lies, and only seldom speaks with forked tongue. The DiG$'s recent failure to get through G$425 helps to define the move from the low as a mere correction. The DiG$s has most likely already seen its high. Yet another reason to swap stocks for silver & gold.

Readers often e-mail asking me which stocks I mean. In brief, all stocks, excepting precious metals stocks or special situations you know are a sure thing, like a cure for cancer or a patent to turn dirt into money. Does that include mutual funds? Absolutely. Mutual funds (except for Bear funds) are made of stocks.

By the way, although precious metals stocks are supposed to rise faster than silver or gold themselves, some recent work by Ian McAvity shows that they don't, at least as an index. You'd be better off just buying silver or gold bullion and stashing it away (not to mention what would happen if you used my silver/gold swapping strategy to increase your ounces).

The US DOLLAR INDEX slipped today below 85, the equivalent of a drowning man dipping below the waves for the third time. I think the buck will yet reach 86, but there's no future there.

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.