Monday, May 07, 2007

Silver and Gold will be Moving Up For Another 4 or More Weeks, Unless Metals Tank in the Next Day Or So

SILVER and GOLD are finally moving together, just not very fast. Silver today worked past its 50 day moving average (1348) & that troublesome 1345 resistance. Now it's ready to bound to 1380 & 1400. Gold gained a piddlin' 80 cents today, but held on near the top of its range. I like this. Silver was worrying me, hanging back. Unless metals tank in the next day or so, it looks like silver and gold will be moving up another 4 or more weeks, maybe even longer.

The GOLD/SILVER RATIO today at 50.86 stands above its 200 DMA (49.972). That means one of two things. A bigger move might be beginning to a higher ratio (silver losing against gold), targeting the top of the trading channel at 52.50. More likely, the ratio is marking the furthest reach of a long series of corrections and sideways movement from silver & gold, and is preparing to drop like your car keys out of your shirt pocket when you lean over the side of a bass boat.

The US DOLLAR INDEX fell less than 5 basis points today, and is holding ground. No proof of a bottom yet, but strengthening. Could still move lower, but still looks like a longer term rally is coming up soon.

Stocks. I have nothing to say, and defer today to Al Thomas, an old stock market hand & former floor trader who really understands markets. You can order his book, If It Doesn't Go Up, Don't Buy It, from & subscribe there to his newsletter. I quote the following from his weekly column for 7 May 2007:

"On August 1, 1927 the DOW ended a string of 19 new high closes of 21 sessions. On July 5, 1929, the same run of 19 new highs of 21 trading days occurred. The latter was only two months before the Great Crash of 1929 started. The first run was the bait thrown out to lure the suckers out of their nests, & the second extracted what money was left in their wallets. Margins then were only 10% so it can be seen why the little guy managed to lose everything. Mr. Investor (I usually call him Joe sixpack, but they didn't have six packs then) could buy 100 shares of $10 stock worth $1,000 for $100 deposited at his brokerage company. A 10% move either doubled his money or broke him.This is the same leverage you will find in commodity futures today.

"Because of the euphoria of the up, up, up 1928-1929 market, speculators were mortgaging their homes to gamble in the stock market. Today margins are 50% and folks seem to be smart enough not to play the market.As the market churns higher & higher it will draw more investor/speculators in. The other speculation -- real estate -- has turned sour & is not as attractive as it once was. They may choose a fund manager who does not understand bear markets (most don't) & they will lose a substantial portion of their funds. During the 2000 - 2003 debacle many lost 40 - 60% or more. All the investing lights are green at the moment, but do not ignore the yellow flag. It is not known when the market will turn down, but it will. The bear is only hibernating. Unless you have your exit strategy in place now, your money will be eaten when the bear again emerges from his cave."

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.