Wednesday, July 18, 2007

The Gold Price Should Run Higher From Here - The Big Hurdle Comes at $692

No doubt the GOLD PRICE today was buoyed by Bear Stearnes announcement that two of their hedge funds are now worthless after investing in sub-prime mortgage securities. securities. (Whoops! About those billions of dollars, well, uhhh, we lost them!) Gold rose 1.2%. But how do you explain silver rising 2.1%, on fears of the financial system melting down? Could it mean -- perish the thought -- that silver, like gold, is money, too? Anyway, silver & gold didn't rise on dollar weakness alone, since they rose against the Euro, too.

Spooky thing about the Bear Stearns mess is the drugged complacency on Wall Street. This scandal breaks, and the Dow keeps on rising. Apparently nobody there has ever heard of "derivatives," or they believe the sub-prime black-hole won't suck in anyone but Bear Stearns. Personally, I think a bit of old-fashioned panic is in order here -- not blood running in the streets, but at least a modest rush for liquidity & the door.

The gold price stands above all the moving averages I watch, so should run higher from here, but the big hurdle comes at 692. If gold clears that, look out above.

Today capped things for the SILVER PRICE. First it broke through 1305 resistance and it also cleared all moving averages. This should be a significant turnaround. Start buying silver. Now.

Ahh, the US DOLLAR! Today it flirted with 15 year lows, lower than December 2004's intraday 80.39, with a low today at 80.227. Closing at or near that Dec. 2004 low implies that the Samolean will take yet another leg down, but the close at 80.368 speaks with forked tongue. Yes, it's slightly lower than the old low, but many times markets exceed levels slightly without following through. In the aftermarket the buck has risen slightly. If it's going to fall, look for a big one tomorrow or the next day. By the way, the 38-year support for the Dollar index lies at 80, with only that 1992 spike below 80. Lows are 90.54 on 31 July 73; 82.07 on 31 Oct. 78; 85.33 on 31 Dec. 87; 80.34 on 28 Feb. 91; 70.19 on 30 Sept. 92; 80.05 on 30 April 95; 90.57 on 31 Oct. 98, & 80.39 at end-December 2004.

The US Dollar Index is now waaaay oversold, & nothing prevents it from becoming more oversold, but watch out for at least a snap-back rally from here, sudden & sharp.

In light of my remarks yesterday about the Dow's performance against silver & gold, Mike from Montana asked me how high the Dow would need to rise, with gold at US$664.70, to reach again the old DiG$ high of G$925.42. Brace yourselves: Dow 29,756.70. See what I mean about "perspective"?

There's an article y'all all need to read at Then you will understand why we can't all get rich buying each other's houses & selling ourselves into debt slavery to the banks.

STOCKS dropped across the board today, nearly every index. That's no big surprise, considering the gains of the last 4 days, but I wonder how much of that fall came from the Bear Stearns fears, & from Comrade Fed Chairman Ben "Drop Money Out Of Helicopters" Bernanke today before Congress. He poormouthed the housing sector & sub-prime lending.

More interesting today was the Dow in Gold Dollars, which closed at G$427.77 (20.694 oz), down G$6.70(0.324 oz.). It looked as if the DiG$ had made a false downside breakout out of its bearish rising wedge by trading up yesterday, but today it fell through its 17 day moving average, first harbinger of a fall. 50 DMA lies at G$424.36, very close. A close below that points very strongly to stocks moving lower against gold for the rest of the year. Close below G$415 confirms.

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.