Friday, April 27, 2007

Gold Needs to Close Over 680 to Confirm it Has Bottomed

The Silver Price hit the bottom of its trading channel & bounced today. As my friend Supertechnician BL reminded me today, "It's a bull market: ya gotta go with it."Even if silver eventually drops more, it ought to rally a few days up to 1350. To prove it turned around today, silver needs to climb over 1345, then 1380. Fridays are not easy to judge from since shorts taking weekly profits can skew the market upward.

The Gold Price is a little out of synch with silver here. It doesn't look as ripe. It needs a close over 680 to confirm it has bottomed, but unlike silver hasn't reached the bottom of its trading channel yet. 200 DMA stands at 632, and strong support around 642 & 667. Gold probably has a few more hard days in front of it, and then, in the teeth of all the doomsayers, another rally.

Yesterday the DOW IN GOLD DOLLARS (DiG$)crossed into a critical resistance area at G$400 (19.35 oz)to close at G$401.41. Today it fell back below G$400 to G$399.64. The DiG$ must turn down now. Otherwise it is signally a long hard correction for gold. It stands above its 200 DMA (G$394.52), so it's at the make it or
break it point.

I hope y'all remember that the US Dollar & Gold do not move in lock step. Although over the long term they must move contrary to each other, for months at a time they can move together. The US DOLLAR INDEX made a low in March 2005 at 81.28. This week it posted a low at 81.29, but wouldn't close below 81.40. Yesterday it rallied, so it might have bottomed. If so then Monday it will race for 82. A close over 82 means some sort of rally has started, but it needs to confirm itself by a series of higher closes. Any close next week below 81.40 sends the dollar further down.

Out of the last 12 days, the Dow Jones Industrial Average has risen 12 days. Hmmm. . . Trouble soon? Today the indices were mixed, the Dow Industrials up barely (0.11%)NASDAQ Comp up 0.12%, S&P down a tiny 0.18 points, the Russell 1000 & 2000 down, the Dow Transports down a whopping 1.04%, and the Dow Utilities down 0.56%. Lot of confusion there, & confused markets fall. Yet with the Dow making new all-time highs day after day, who will doubt stocks -- other than me? I doubt still. 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.