Thursday, July 05, 2007

Both Gold & Silver Are Behaving as if They Didn't Want to Drop Further

Gold Price Close Last Week : 648.10
Gold Price Close This Week: 648.40
Change: 0.30 or 0%

Silver Price Close Last Week : 1235.3
Silver Price Close This Week: 1246.9
Change: 11.60 cents or 0.9%

Scan, first, the week's winners and losers. Winners were Silver and Gold Prices, the Dow in Gold Dollars, stocks, & platinum. Losers were the US dollar index and palladium.

SILVER remains below its 200 & 300 day moving averages, & must close above 1265 to climb over the 300 DMA. Above that resistance at 1280, 1325, & 1380 loom. But I am tantalized by developments in gold today. My friend BL called to point out that gold stocks were strong today, even though gold fell. Agnico Eagle (AEM) jumped up 5%, & very evidently broke out topside, although special events peculiar to that company might have been responsible. Silver & gold's seasonal pattern also calls for a low about this time of year. Gold is oscillating around its lower trading channel line. A close below 642 will take gold further down. However, both gold & silver are behaving as if they didn't want to drop further. My guess is that we will see lower prices, but I am not so convinced that I wouldn't buy some now. Also, if you have gold still that you want to swap for silver, this would be the time to do that.

The US DOLLAR INDEX may have caught this week above its old low at 81.25, but if it did it's keeping its cards close to its breast. Maybe it has built a double bottom for a rally, and maybe not. A close below 81.25 will take it further down, a close over 81.90 points to a rally. I think that latter outcome more likely, but the trend remains down.

Stocks were mixed today, with some indices up & some down, a sign of confusion in the market -- or a sign of a holiday week when most traders are away.

What does concern me is today's DiG$ close, the highest (by gold-pennies) so far in this attempt to pierce resistance under G$436 (21.092 oz). The DiG$ is behaving like a market that wants to go higher. It has built a rising, flat-topped triangle and keeps coming back to the G$429 - G$432.50 area. Only a break below G$415 now would gainsay that expectation.

Does that mean I am throwing over silver & gold for stocks? Hardly. In the long term silver & gold will outperform stocks many, many times. Of that I have no doubt. However, in the short term we may see stocks outperform gold, which offers you a perfect chance to swap stocks for silver & gold.

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.