Friday, March 16, 2007

Gold and Silver Finished a Correction and Began Rebounding This Week

This is one of those weeks that (at least) seem clear. Metals finished a correction & began rebounding, while stocks & the dollar fell again.

SILVER finished the week well. On Wednesday it defended lows a second time, this time 1254 cents. Climbing over 1300 today showed strength, since significant resistance challenged silver from 1306 to 1310, and it closed at 1312. It has now kissed the bottom line of the trading channel without breaking thorough.

Above us lurks the 50 day moving average at 1329, where also resistance is nestled. Therefore a close over 1330 will send silver up to challenge 1380 and 1400. On the downside, silver must hold 1287.

GOLD behaved much like silver this week. It kissed off the bottom of its channel and defended 636 for the second time. Today's close above 650 only makes me long for one above 667.

Metals are still not altogether out of the woods and in the bright sunshine, but they are walking towards it.

The GOLD/SILVER RATIO closed down slightly this week, consistent with rallying metals.

Want to give your ulcer some real trouble to chew on? The long term support in gold lies at 525 and in silver at 900 cents. Right -- they could fall to those levels without breaking below their bull market uptrend. I don't expect that, but it gives you an idea how mild the correction just passed really was.

STOCKS spent 5 days climbing from 12,063 to 12,318, then gave all 242 points back in a single day. Right now 12,050 has proven to be support. It will probably be tested again next week, and might give. The absolute bottom line support that the Dow must hold is 11,200. Because stocks form such a huge market it takes them a while to roll over. There is probably yet another rally lurking in stocks, to test the last all-time high and post a firm double top. Get ye out while time abides.

The DOW IN GOLD DOLLARS shows quite plainly what happened this week: stocks yielded again to gold. The DiG$ is in a precarious position, and next to come should be a large drop. Swap stocks for silver & gold while you still can.

Evidently the US DOLLAR INDEX intends to knock again on the door of its lows, namely, the December low at 82.35. Today's close was the lowest yet, in a string of lower highs & lower lows, which, in Tennessee at least where we call a hog a hog and a dog a dog, is called a downtrend. The buck could drop as low as 80.50. Thereafter is a rally possible? We'll see, but we have a while to wait.

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.