Friday, January 26, 2007

If You Haven't Yet Bought Silver & Gold, Stop Waiting. You'll Never Buy it Cheaper.

Last week I confessed that despite what others were saying, gold looked strong to me. It proved itself this week, soaring briefly during the day yesterday over 650. Today gold gave up 3.30, but remained comfortably above critical support at 640. This being Friday, I suspect a lot of longs with fat profits cashed out for the week.

The GOLD PRICE will come back next week for another shot at 650. It should break through. If so, gold will roar toward 740 before it even takes a break for breathing. As long as gold holds above 603, we have no problems, but from here I would bet you'll never see gold below 640 again.

The SILVER PRICE handily climbed above 1315, its last high, and then ran to 1350. Next week it should climb through that because this move is very young yet. A close over 1407 stops the mouths of all croakers & silver runs away. Silver stands above all its moving averages. Look for this rally to unfold very fast. On the downside silver must hold 1250, but I don't expect to see that price ever again.

THE US DOLLAR INDEX ended the week higher, along with silver and gold. That is another proof that silver & gold, which also rose this week, have decoupled from the US dollar and are behaving like independent currencies, which they are. Dollar is a dog long term, so flee dollar denominated assets like bonds, annuities, mortgages (as the mortgagee), & pensions.

The GOLD/SILVER ratio has finally begun to fall a bit this week, and has edged down toward the bottom of the last month's range. The ratio should fall below 35:1 during this rally. If you haven't yet bought silver & gold, stop waiting. You'll never buy it cheaper.

Weekly charts will reveal fascinating secrets this week. STOCKS made the first part of a "key reversal" this week on a weekly chart -- the Dow broke into new high territory, but closed the week lower. A follow-through next week with a lower close would put the top on the Dow. It's certainly possible: the Dow stands just over 12,450 support. If it falls through there, 122,340 is the next support, then 12,160. Owwww.

Other indices fell today, although the NASDAQ Comp rose a few points. The NASDAQ 100/Dow spread is headed lower, also not a good sign, and the Dow Transports (which must confirm new highs in the Industrials, according to Dow Theory) fainted today, nowhere near a new high.

The DOW IN GOLD DOLLARS, after falling below G$400 yesterday, rallied a couple of gold-bucks to G$400.51. The G$400 level will prove strong resistance. Does that mean gold will rise faster than stocks, or stocks fall faster than gold, or gold rise while stocks fall? Take Door No. 3. Which means -- for those who have not been paying attention -- that you ought to swap stocks for silver and gold, pronto.

By the way, the Dow hit a high of about 12,620 this week, not far from my 12,650 target. Was that the end? We'll see.

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.