Wednesday, October 10, 2007

Silver and Gold Prices Both Popped Today, Up $4.60 & $22.50

SILVER & GOLD PRICES both popped today, up 22.50 & US$4.60, but without any real effect. The silver price must clear resistance at 1350 and 1380, the gold price must clear 742. Anything in between is just that -- in between. Worst threat to silver & gold right now is the dollar, but they are also overbought. Watch out for another possible drop, and buy more there.

I read something last night that might explain gold & stocks moving together. Big hedge funds are borrowing yen and with the leveraged proceeds buying stocks -- and gold, as a hedge against the dollar. This cannot come from a sane mind, because when the yen trade begins to unwind, these people will be long stocks and long gold while the yen soars against the dollar. Seems like they will lose both ways if the stock market decides to drop again, maybe taking gold with it. I'm about worn out trying to make sense out of the senseless.

Last night I got to thinking & remembered I had written that stocks were probably going higher. I cringed, yes, cringed as I thought about it more deeply. Now today, sure enough, they break out above 14,100, but I am still cringing. More likely than stocks going much higher, thanks to all the breadth problems, is that they are making a gigantic double top with January 2007, the second wing of which is itself doubled at 19 July & today. Complicating this is the behaviour of the Dow in Gold Dollars, which is trembling back & forth between G$386 (18.605 oz) & G$396 (19.087 oz). It's starting to look something like a sidewise consolidation, instead of a breakdown.

Did I just contradict myself? Well, it sounds like it, but that's how I see those charts.

The US DOLLAR INDEX gained over 45 basis points yesterday and gave back 30 of them today. Moving higher awfully slowly.

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.