Monday, February 12, 2007

If the Gold Price Remains Above 650 and the Silver Price Above 1350 - No Big Downside is Coming

Friday I was too prideful about SILVER and GOLD PRICES. After such a big move, they were entitled to back up a few steps, & I should have thought more about that happening on Monday.

However, let us put this in perspective. The GOLD PRICE backed up, but remained above 660. The SILVER PRICE backed up, but closed at 1367.90 just above last week's low.

Get the picture in your mind's eye? It's a series of higher highs and higher lows -- in other words, an uptrend. As long as the gold price remains above 650 and the silver price above 1350, no big downside is coming. Upside I'm watching 666 & 1406. Once those are breached, the fireworks will really go up.

Owwch. The GOLD/SILVER RATIO took a licking today. It rose even higher in the aftermarket (silver at 13.62, down 5.9 cents, and gold at 661.60, down a buck). Metals may fall a bit more tomorrow.

In a primary bull market (such as silver & gold are now in), the best strategy is to get long and stay long, buying more whenever you can. In a primary bear market (such as the dollar's & stocks' currency markets) the best strategy is to get short and stay short, selling more whenever you can.

The US DOLLAR INDEX smacked in the head my last Thursday's suspicions that the buck was about to drop further. Today it ran up to the top of the range (84.5 - 85.2). This back-&-forth can drive you crazy, so you just have to steel yourself to remember that none of it means a hill of beans until it closes above or below that range. My guess is, 'twill break out finally to the upside, but I'm not willing to put money on that.

STOCKS are making up for all those days they worked relentlessly higher by working relentlessly lower now. They will surely make a stand at Dow 11,200. Whether they will get that far this go-round remains to be seen. What y'all shouldn't miss is that the DOW IN GOLD DOLLARS sank last week nearly G$10 (1/2 an ounce) & stopped only gold pennies away from the 200 day moving average. A bounce off that is predictable, but it didn't bounce much today. That DiG$ drop makes another witness for my advice: 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.