Wednesday, September 05, 2007

Gold and Siver Prices Need to Show More Strength to Call the Correction Finished

Just as yesterday confounded all the sublunary mathematicians who believe that stocks, metals, & the dollar must move opposite to each other, so today they were yet again bewildered. Stocks, metals, & the dollar all dropped together. So much for logic & formulas. Markets have their own minds, and their mouths address only humility.

The SILVER PRICE bounced off the 1225 - 1235 resistance area, but held on at 1218. One scratcheth one's head, wondering why silver laggeth so, when physical demand remains so strong. Silver must cross 1300 to claim another rally. We watch.

The GOLD PRICE, not very surprisingly, bounced off the downtrend line it was trying to penetrate. That's not defeat, yet. Gold needs a large breakout to convince, over 710. If it drops below 666, it will fall down through support and through the bottom of an equilateral triangle.

If I am talking out of both sides of my mouth, it's because I'm thinking out of both ears, tugged in two directions. I just can't see enough strength in the metals yet to call the correction finished, but breakouts above 1300 & 710 would change my mind.

The Dow hit its 50 day moving average yesterday & bounced off, stymied. That can mean one of 2 things: First, it has failed to penetrate the 50 DMA, & so will fall much further, or Second, it only bounced off the 50 DMA to touch back to the place it broke through the downtrend line, preparing to blast off upwards. That leaves us waiting to see whether the Dow can close above 13,500 & rally more, or whether it closes below 13,050 for another long tumble. Me it doesn't bother, because I advocate swapping stocks for silver & gold, allowing other people to have the enjoyment of losing their capital in stocks.

The US Dollar Index took a blow to the head today, falling over 25 basis points. The buck seems slowly stumbling its way into a rally. It will be okay as long as it keeps above 80.441. Today & yesterday it bounced off its 50 DMA, but that's normal on the first try, so give it time.

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.