Friday, September 07, 2007

Silver Price is Lagging, While the Gold Price is Breaking Out - Something is not Quite Right

On Thursday & Friday I was out of town, so I thought I would try to catch y'all up today.

How markets behave against each other speaks volumes. Silver usually outperforms gold while confidence in financial assets (stocks) is rising, so let's ask, what is the rising Gold/Silver ratio telling us? Like the throb of tom-toms in a Tarzan movie, it's signalling bad juju for the stock market. Confirming that, the Dow in Gold Dollars has free-fallen the last two days. Once if fell through G$400 (19.50 oz) it shed another ounce (G$20.672) in two days. Wow. Very often I have said that the Dow in Gold Dollar is the most reliable indicator I follow, because it is. Right now it is screaming, "Get out of stocks!"

Things just go from bad to worse. Not only could the US Dollar Index not rally, it has now fallen to a new low, a low below the fatal 80 support level that for 38 years has held. I can't imagine the Nice Government Men allowing the dollar index to fall below 78, but maybe the day is shortly coming when they are powerless to stop it.

GOLD spoke out of both sides of its mouth today, rising 3.50, but still below 710. However, remember that gold has broken out above the downtrend line from the May 2006 peak. Yet that lagging silver keeps casting doubt on it. A big drop in stocks -- would it pull gold down, or send refugees fleeing into gold? At this point, I don't know. Last month gold followed stocks down. Future will become plain this week.

SILVER has just barely completed a 50% correction of its long drop, while gold is breaking out. Something's not quite right, like entering your living room & knowing something's wrong, something's been moved, but you're not sure what. To match gold, silver needs to close above 1300.

STOCKS look terrible. 200 Day moving average isn't far away at 12,922. 12,518 was the last low, & when that one is breached, the rats will be climbing over the sides of the ship like lemmings over a cliff. Look for massive down days. Swap stocks for silver & gold, now, while there's still 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.