Thursday, May 10, 2007

Gold Came to Rest at 665.10, Dead on the Uptrend Line From the 2006 Low

After a low today of 664, gold came to rest at 665.10, dead on the uptrend line from the 2006 low. Remember all the fun we had on the way up, working through 667? Well, here we are again. With the 200 day moving average at 634.09 and the 300 DMA at 626.89, gold shouldn't fall much further.

Silver -- whoo! -- hit a low of 1243 [sic] but off that 1250 support bounced back to close barely over 1300.(Whenever anybody uses the expression "bounced back", it's a sad day.) DMA stands at 1274, so that's a possible target, although somebody with big bucks and determination keeps buying at 1300.

The GOLD/SILVER RATIO may be headed for 52.50 and its upper trend line. It has already climbed over the bodies of its 50 DMA (49.88) and 200 DMA (49.87) but the 200 is crossing headed down while the 50 is headed up.

Now I will astonish & amaze you by saying that I think metals will not go much lower than they did today. On the chart both have broken out of triangles and headed up, and I have to interpret this move as the correction of that breakout and touchback to support/resistance. Whether I am right or not, the market will tell us tomorrow. Anyway, I am long and getting longer, so I would suggest that y'all, too buy silver and gold.

Probably the catalyst, but not necessarily the cause, for today's drops in silver, gold, & stocks was the US Dollar -- the Dollar index rose 28 basis points to 82.28. That's enough to make it look to the veriest fool like a dollar rally. (Odd, isn't it, that the weakness of a nation's currency would be viewed as its strength, and vice versa. That's what the stock market has been telling us, that it expects to do better with a weak dollar.)

STOCKS took a whack. Dow fell 1.1%, the S&P fell harder, about 1.4%. When a market overextends as much as stocks have, there's not much point talking about where they might go. Let's leave it at this: a break is overdue.

The DOW IN GOLD DOLLARS today spiked up to G$411.61 (19.91 oz) & peeked through the downtrend line. Above lies old resistance at G$415-417. If the DiG$ does not turn around here, it threatens a rally that could carry to G$500 (24.19 oz).

Yet another proof the Stock market is overvalued was a headline on MSN Money (which, I hasten to add, I visit only for the quotations & not the commentary).

Headline read: "Dow 21,000 in 2012," on same page with "Retailers Post Weakest April On Record." Argument for Dow 21,000 was that it's "only" a gain of 60% or 10% a year. Yeah, and if frogs had wings . . . Anyway, it made me think. At 10% gain yearly, that puts silver at 2094 cents and gold at $1,073 by 2012. And you'll more likely see that than Dow 21,000, unless of course the losers running the Federal Reserve & US Government occasion a hyperinflation, in which case you might see Dow 21,000,000, but it won't buy a book of matches.

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.