Friday, March 09, 2007

Gold Price Close Below 636.7 Would Tug Gold Toward 625

The GOLD PRICE did well this week, with a high close of 653. However, next week may bring the real beating. Low close for this correction so far has been 636.70. so watch that number. Any close below that would tug gold toward revisiting its 200 day moving average around 625. If, on the other hand, gold closes above 667, the danger of another fall would be past.

The SILVER PRICE lagged gold this week, as evidenced by the rise in the GOLD/SILVER RATIO. Unless silver can climb above 1325 cents then it, too, will be a candidate for a ride to the 200 DMA, now about 1232 cents.

Long term nothing has changed for the metals. We are witnessing a correction, which is normal but unpredictable. That correction's appetite should be filled at the 200 DMA. Keep your eyes open for more buying opportunities. Bottoms in this bull market have tended to be very swift, v-shaped affairs.

The Nice Government men on the Plunge Protection Team had their work cut out for them to raise the Dow up off its bed of pain. They hit one good day, and then the down wilted the rest of the week, unable to get its leg over 12,300. Maybe next week. Outlook for stocks is a rally to near the high, then collapse without looking back. If the Dow drops below 11,200, then all bets are off and the free-fall has begun. Take this last opportunity to get out of stocks. The best plan would be to swap them for silver & gold, but even if you don't do anything better than selling stocks for US dollars (which is not a good plan), at least you won't sink with stocks.

The DOW IN GOLD DOLLARS is fiddling around the G$390 (18.87 oz)level where it fell off. It may reach through that to rally to more powerful resistance at G$400 (19.35 oz). Gold weakness next week might make that possible, but the trend is firmly down and the fall, once it starts, will be spectacular.

The US DOLLAR INDEX poked its head above 84 this week, & likely will climb to 84.5 before it completes its reaction. A close above that level would signal a possible rise to 87.5, but before anything like that happens I expect to see the buck lower once again.

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.