Friday, July 20, 2007

Gold & Silver Were Both Star Players this Week

Gold Price Close Last Week : 666.70
Gold Price Close This Week: 683.90
Change: 17.20 or 2.6%

Silver Price Close Last Week : 1307.8
Silver Price Close This Week: 1331.5
Change: 23.70 cents or 1.8%

End of the week resembles the scoreboard at a foot-ball game. Only thing that counts is who scores the most. With that in mind, 'twas an interesting week. Silver & Gold both were star players this week, but gold surprised me by out-performing silver.

The Gold Price has reached the downtrend line from its May 2006 high. If it crosses that line, & stays crossed with a 2 day close, then one bodacious rally will bust loose. After big gains this week, a reaction back from that line early next week before another upward attack would not surprise me. By the way, last week -- Monday & Tuesday -- were an object lesson in the difference between a correction in an ongoing uptrend and a weak and sinking market. Gold begins to look as if it has already made seasonal lows & is beginning another huge leg up. However, that must be confirmed by closing above today's close, & above the old high at 692.

The Silver Price stands at the downtrend line from its Feb. 2007 high at 1459. A higher close means the rally will continue, but confirmation comes only with closing above that last 1459 high.

If silver and gold close next week higher than they did today, buy more. If they close above 692 & 1469, buy lots, lots more.

The GOLD/SILVER RATIO seems to have made its high at 52. If you have any gold left that you want to swap for silver, you'd better do it in a hurry.

Although STOCKS hit four new highs, including yesterday's at 14,001.41, they have fallen since last week. In spite of a new Dow high, the Dow in Gold Dollars has fallen through two support levels & hovers now just above the Big One (G$415). The Great Samolean, the US DOLLAR, today dropped through its Dec. 2004 low, its lowest level since 1992.

The US DOLLAR INDEX has broken its Dec. 2004 low at 80.39 with an intraday low today of 80.117, the lowest since the 1992 78.19 low. Why is that significant? For the past 38 years the dollar's lower support has been 80, with that one 1992 spike toward 78. Below 78 there is -- nothing really, so there's no telling how low the dollar might fall if it pierces 80. The more likely case near term is a new dollar low somewhere between here & 78.20, one last leg down, & then a dollar rally for six months or a year. For now, step aside & let the buck seek its own level. You should long ago have shucked or hedged any investments or obligations that entitle you to be paid dollars in the future, including annuities, bonds, & pensions. Long term you want to owe dollars at most, not own them.

Technically the DOW put in a double top this week, & dropped today on higher volume -- not very positive. I measured a move to 14,100, & other indicators are not yet negative, so stocks could keep rising. Big story on Wall St. this week was Bear Stearnes writing off two huge hedge funds for billions of bucks. Sub-prime mortgage securities can harm your financial health. Nothing is changed by stocks' new highs. Swap stocks for silver & gold.

The DOW IN GOLD DOLLARS had formed an upward wedge, which usually resolves downside, but after a false breakout it moved back up into the wedge. Then broke down again. Because the DiG$ failed to reach a new high this week when the Dow was making new all-time highs, and collapsing today through two support levels (G$425 & G$420) leads me to expect a change of trend soon in which silver & gold resume outperforming stocks by a large measure.

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.