Thursday, May 17, 2007

Gold and Silver Seem Headed For Their 200 Day Moving Average at 635 and 1279

In a perverse way, the IMF's sales-sabre rattling in fact bodes well for the gold market. Think. The IMF never sells any gold, they only make announcements well-timed to knock down the gold price. In other words, the IMF is the stalking horse for central banks, employed to talk gold down. But wait a minute -- if gold is so weak, why does the IMF need to jawbone down the price (using Samson's weapon, of course)? That's where things go upside down. If gold is falling and the IMF still makes selling gurgles & gulps, what can it mean but central banks are afraid gold is about to run away?

GOLD today sank to 656.20, down four bucks, while SILVER dropped four cents to close at 1280 cents. Both metals seem headed for their 200 day moving averages at 1279 and 635.14. For several days now silver has repeatedly touched that 200 DMA & bounced off. A spike through it down to 1250 might mark the end of this.

A friend called today to ask if I thought gold & silver were in trouble. He said my commentary yesterday sounded as if I thought they were. If it did sound that way, it sounded wrong, because nothing has happened to convince me that silver & gold are not in long term bull markets that will last at least another five, and probably another 10 years. I mentioned those lowest correction possibilities, gold at 500 & silver at 950 cents not because I expect to see those. Rather, I was trying to point out that they could drop that low & lower without damaging their uptrends.

No, the metals bull market is not over by any means. Watchful investors will use this as an occasion to buy silver and gold.

STOCKS today dropped, both the Dow & S&P500, but without much meaning. The closing Dow in Gold Dollars (DiG$) rose to G$424.55 (20.54 oz). As I said yesterday, if the DiG$ doesn't turn around quickly, it will run for the Half-Way Mark at G$475 (22.98 oz). I would still swap stocks for silver & gold. If stocks rise even higher against silver & gold, that will make the swap even more attractive.

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.