Friday, February 16, 2007

Gold and Silver Could Correct Next Week

Let the world be silent, and let the week speak! Silver & gold made only tiny gains this week, which I will rationalize -- whoops, make that "explain" -- below.

SILVER & GOLD PRICES have both broken out to the upside in Euros and Yen and dollars. What signifieth that? That gold's strength swelleth not merely against one currency or in response to one currency's move, but against all fiat currencies. Confidence in government money is falling.

The GOLD PRICE next week could correct shallowly, or it could bull its way right on through 670 and stretch its legs toward 720, the old high. Correction will hurt nothing -- scare the tourists but not the natives -- as long as it holds above 650.

Bear in mind that although 720 was the last high, it's true import doesn't lie there. That price was the highest reached in 1980 except for seven trading days. In other words, it was the real peak, while the 850 high was the overshoot. Therefore once gold pierces 720, 850 will be no more than a wet cardboard barrier against a .44 magnum.

The SILVER PRICE kept on chugging away last week. The whole area between 1380 and 1406 has proven stiff resistance, but above 1406 - 1420, silver will run. It might surprise all of us and race clean through 1500 without even slowing down. Like gold, silver could suffer a correction next week, but all that's needful is holding 1350.

The Dow went to another new all-time high -- ho-hum, while the US Dollar index plunged the depths of despair & contempt. Gainer of the week -- O, it paineth me to speak it -- was the Dow Industrials. Yet it pays to look behind the screen of events to ask whether things are really as they seem.

The US DOLLAR INDEX made a new low this week at 83.94 -- below the bottom channel line, below the 50 day moving average (84.29), below the bottom of the Bollinger bands. It was just "Look out below!" all week long. My guess is 'twill look the same next week, too, since this week broke 84.50 support. All indicators indicate (did y'all notice that little bit of bureaucratese?) the buck has much further to fall -- to the January low at 83.17 or, quite likely, the December low at 82.35. Chart has an evil, bilious look to it. It ought to leave any dollar holder "apprehensious."

STOCKS (taking the Dow Industrials for their proxy) posted a new all-time high this week. Of course, all those other indices for which the Dow kindly proxies are nowhere near such levels. Far's I can see the Dow has not topped yet, but is long overdue for a correction. Top could come anytime, but it will be hard to recognize because it will take a long time -- couple of months -- for the Dow to roll over. Meanwhile other indicators keep whispering to "take the money and run" from stocks.

DOW IN GOLD DOLLARS rose nearly G$5.00 (0.234 oz) this week, but sluggishly. That could collapse at any time, perhaps next week, screaming to those with ears, "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.