Thursday, July 12, 2007

Barring a Fall Below 1250 & 650, The Trend for Gold & Silver Lies Upward

Gold Price Close Last Week : 648.40
Gold Price Close This Week: 666.70
Change: 18.30 or 2.8%

Silver Price Close Last Week : 1246.9
Silver Price Close This Week: 1307.8
Change: 60.90 cents or 4.9%

Over the weekend I'm taking a little trip, & I won't be here tomorrow, so I'm sending this out today.

What a week! The Silver Price was the clear winner & champ with a 60.9 cent or 4.95% gain! The Gold Price gained only a measly $18.30 or 2.8%.

Silver and Gold have done well, but next week must meet a hard test, resistance at 1325-1335 & 667. If this is a rally -- and I believe it is, with the bottom behind us -- silver & gold must punch right through that resistance & march on to other barriers. Bear in mind, too, that we might have seen the bottom, but instead of an immediate rally, metals might work higher sideways from now until September.

But for now, barring a fall below 1250 & 650, the trend most surely lies upward. By the way, silver did break out through its descending trendline, confirming gold's breakout earlier this week.

Stocks (as measured by the Dow) gained 2.2% this week to break out over 13,700 resistance & close today at a new high, 13,861.73, although the broader S&P500 has not yet bested its Spring 2000 high. Offering more instruction & deeper insight into stocks, the Dow in Gold Dollars & the Dow in Silver Ounces paint a bigger picture. The DiG$ sank slightly, the DiSOZ fell 2.6%. The DiG$ has fallen over 50% from its August 1999 peak, and the DiSOZ has fallen nearly 60% from its June 2001 peak. I know this seems repetitive to you all, but so hard are our investment skulls, having been layered with leaden propaganda from Wall Street about stocks. Wherefore, I repeat yet again, swap stocks for silver & gold. The DiG$ & DiSOZ both indicate that stocks are not about to outperform silver & gold, and this week the DiG$ broke out to the downside.

The US DOLLAR INDEX is getting creepy. Low today was 80.545, just about the December 2005 low. 80 has stood for nearly 40 years as support, with a couple of spikes to 79. What signifieth all that? Simply that if the dollar falls through 80, there's no safety net below. Why are stocks jumping? Why are gold & silver rising? In part at least because scared dollar holders are running to anything of value -- anything. Nor would it surprise me to learn that the late & present turmoil on Wall Street over rotten debt securities & derivatives (CDOs), which yesterday broke out also in Australia, is driving folks out of the buck.

Now that we've got the most likely outcome out of the way, what is the surprise that might wreck our plans? A dollar rally. A double bottom at 80.50, followed by a six to 12 month dollar rally that pulls the rug out from under all expectations. Does this change the longterm outlook for silver & gold? No, not at all, it just throws more up & down in the market. Remember that not only the dollar is rotten, but also the Euro, the pound sterling, & all other unbacked, fiat national currencies. Therefore demand for silver & gold ariseth not only from the dollar's rot, but from all other currencies' rot as well.

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.