Thursday, September 20, 2007

The 2-Day Close Above 720 Confirms a Rally & Breakout, With a Target of 790 - 800

The dollar tanked, GOLD and SILVER PRICES took off, the stock market sank, and I am as lost as a golf ball in high weeds.

The GOLD PRICE jumped over US$10 today to give us the 2-day close above 720 I was looking for. That confirms a rally & breakout, with a target of 790 - 800. However, after so much gain in 4 days, don't let a little touchback correction to 720 demoralize you.

The SILVER PRICE hopped 36.5 cents today, enough to bring that GOLD/SILVER RATIO down a bit as it gained on gold. A Silver close over 1300 was my second condition for confirming a gold & silver rally. Now let's see if I was correct. Silver target is 1500 to 1551.

Only fly in all this perfumer's ointment is that US Dollar Index. A sudden rally could put the kabosh on silver & gold.

Today the US Dollar Index fell a huge 72.8 basis points to 78.605, about 40 basis points above the 1991 low. The thought that keeps on sloshing around in my brain is, "How much further can this go?" The dollar now has fallen mightily in response to the Fed's rate cut, and this is the third day and about when I expected the effects of that cut to trace out its last effect. The Dollar must be somewhere near its bottom, because if it falls through that 1991 low, it's unthinkable. It would mess up too much cosiness in the world monetary set-up, the cosy club of central bankers. Think: the Europeans & the Japanese don't want to see the dollar at 60, because it will make their products just that much less competitive. Since 1948 & Bretton Woods they've been used to a free ride on the back of an overvalued dollar, so they won't like a lower dollar. That alone makes me suspect that sometime soon the dollar will turn round, and stage an astonishing rally. Not that that means the dollar is a sound or worthy currency, but it is set for a big counter-trend rally.

Stocks fell back today, catching breath, and are not yet quite out of range of falling back & failing. Anyway, all of y'all have already sold your stocks & put the proceeds into silver & gold, as I've been begging you to for months -- right?

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.