Friday, October 12, 2007

Gold and Silver Prices Climbed Higher This Week - Gold Closed at 748.70, Silver at 1380.3

Gold Price Close Last Week : 732.80
Gold Price Close This Week: 748.70
Change: 15.90 or 2.2%

Silver Price Close Last Week : 1325
Silver Price Close This Week: 1380.3
Change: 55.30 cents or 4.2%

So far in this bull market we haven't seen too many weeks when the SILVER PRICE gained 55.3 cents & the GOLD PRICE gained $15.90. Will it last?

"Don't fight the tape" is the corollary of the Wall Street proverb, "Bull markets always climb a wall of worry." While I was worrying about a correction, silver & gold ignored me & kept on climbing. They closed above my 1380 & 750 targets yesterday, but fell below them barely today. What does that mean? That I've got a 50/50 chance of being right, whatever I say.

On Monday we'll find out which way they're going. If silver closes below 1350, they'll probably correct, with the chance silver can fall as low at 1300 - 1280 & gold as low as 690-700. I consider that the less likely outcome. More likely, the present rally will extend, but a target is difficult. If the little squiggle of the past few days marks half of the rise, then it will continue to US$825 or so. However, there's been so little trading in this area before, it might stop at 800 or overshoot to 850. That would drag silver up over 1500, maybe to 1600 just to fool everybody's smug expectations.

Present nightmare? That the silver gold ratio doesn't stop at the 57 it has already reached, but rallies to 65, implying big corrections in silver & gold. Other nightmare? A blistering dollar rally that knocks the stuffing out of stocks, silver, & gold. Eventual outcome? Metals remain in a bull market & gold takes longer to reach $1000 & silver to reach $24 than I originally thought.

The US DOLLAR INDEX gained 7 basis points today, stiffening its spine as it gets closer and closer to 78. Three possibilities loom. (1) the Samolean drops to the previous low at 77.66 and continues to drop like your glasses over the side of a ski-boat, straight to the bottom of the lake. (2) It drops to 77.66 or nearby & posts a double bottom as a base for a rally, or (3) it stops someplace around 78, and rises from there. I consider (2) or (3) most likely, as I still expect a rally. However, I will not weep if (1) eventuates, because I
have as few US dollars as possible.

I keep vacillating on stocks, although it makes no difference to my buying them. Whether the Dow soars for 36,000 or drops like the balance in your checking account after payday, I don't want to own most stocks. Besides, silver & gold are going to outperform them so badly I wouldn't want to own them anyway.

Proof of my contention is the Dow standing near new highs but the Dow in Gold Dollars near to breaking down for a new free fall -- ditto the Dow measured in silver. In dollar terms stocks are either making a double top, which I consider most likely, or they are about to rise much higher (but not as fast as gold).

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.