Wednesday, May 16, 2007

Unless SILVER & GOLD Turn Around Tomorrow, They are in Danger of Slipping a Long Way

Unless SILVER & GOLD turn around tomorrow, they are in danger of slipping a long way. The Nice Government Men, too, have greased the floor & pushed, as usual. The IMF, which for nearly two decades has threatened to sell gold but never sold any, on Monday threatened again to sell 400 tonnes. Am I just suspicious, or do y'all, too, find it odd that the IMF never makes these announcements except when the central banks need gold to be waylaid & whupped?

Today somebody sent me an article by a technical analyst who remarked that if gold & silver broke here it would be "the end of the bull market." I don't get this. Apparently this fairly sophisticated analyst doesn’t know that bull markets last more than 5 or 6 years. And that from time to time they have very scary corrections. As I have already told y'all, it is possible that gold might fall to US$500 & silver to 950 from here. I don't expect that to happen, but it's possible. More likely is a drop to 635 & 1250. The next couple of days are critical, & will tell us much. I can tell you this: substantial physical demand has appeared at these prices. Buyers are hanging over the market like vultures ready to buy every price dip.

SILVER is volatile. It moves fast, up & down. If you can't stand that heat, stay out of silver's kitchen. The GOLD/SILVER RATIO rose today to a new high for the move. If it moved to the top of the trading channel at 52.5, and gold dropped to 635 (its 200 DMA), silver would be at 1210 cents. On the other hand, silver's 200 DMA today is at 1278, and ought to stop near there.

Today's drop in gold -- helped by a 103 point Dow rise -- drove the Dow In Gold Dollars (DiG$) up to through the G$415-417 (20.08 oz - 20.17 oz) to close at G$422.31 (20.43 oz). I would say this is where the DiG$ ought to turn around. Otherwise it will head higher in a major correction targeting G$475.00 (22.98 oz), the half-way mark of the long dive from the all time high at G$925.42 (44.77 oz).

The Dow rose 103.69 points today to close at 13,487.53, another -- ho-hum -- new all time high. It's spooky, because I lived thru the same thing with gold & silver in 1980. All the juices greed can muster are running in the bulls, convincing them that it will go up forever. All the news is bullish, & no contrary event can bring it down. When it breaks & sinks like a Holstein cow out of a clear sky, they will stand speechless & unbelieving as the cow hurtles toward them on the ground. I could look each of them in the eyes, shake them, slap them, shout at them what's going to happen, & still they wouldn't believe. Swap stocks for silver & gold.

Sweetly symbolic of the whole stock scene -- and the modern world -- on Monday Daimler-Benz announced that it was selling Chrysler, which it bought in the 1990s for $39 billion and which last year lost $1.5 billion, for $7 billion to the Cerberus Group. Cerberus? Cerberus? That rang a note of memory. Cerberus was the three-headed hound that guarded the gates of Hades in Greek mythology, allowing the dead to enterbut blocking forever their exit. Clever, huh? Cerberus now swallows the dead Chrysler.

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.