Tuesday, September 11, 2007

The Gold Price Could Run to $790 Very Fast

The GOLD PRICE rose US $7.90 today. For strength's sake it might have spent a few more days building under 710. If it crosses 720, the gold price could run all the way to 790 very fast. However, if a monster dollar rally hit it then, the gold price could retrace all of that gain and more, sending all the gold bugs back into the woodwork and putting a big "Finished" sign on this correction. Of course, that'll be just the time everyone will be screaming not to buy gold or silver. Or, gold could keep right on going up. You see, it's not simple.

The SILVER PRICE today, still lagging gold, reached a 68.2% correction of the fall from 24 July to 16 August (actually, 1263.5 on a closing basis). To confirm gold's move silver needs to push over 1300, really 1335. Credit crunch or not, the silver price makes me nervous about gold's rally.

Physical demand is huge right now, bigger than anything seen since the spring 2006 top, but premiums on physicals remain high. Message is that silver & gold prices will rise further. (I thought I'd just throw that little fact in there to add to your bewilderment.) Usually those physical premiums are a fairly reliable (60-75%) indicator of market direction.

Today the Dow surged -- isn't that the Bushite word?--to 180.54, but alas! without much effect on the Dow inGold Dollars (DiG$) which rose a mere one gold dollar, or about 1/20 of an ounce. I looked more closely at the Dow in Silver Ounces, too, and stocks have peaked against silver as well. Big drop coming in stocks.

The US Dollar Index is falling into new territory, below the last low and below the 80 mark, 38-year support. Surely, surely here somewhere it will turn and rally. Even without being managed it ought to do that. Biggest surprise for everyone right now piling into gold & out of stocks & dollars would be a massive, sudden rally in the US Dollar, taking all the shorts by surprise. Watch out -- things may not be as simple as they seem.

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.