Friday, November 30, 2007

Buy Gold, and Keep on Buying if it Drops Further - The Bottom is Very Very Close

Gold Price Close Today : 782.20
Gold Price Close Last Friday: 824.00
Change: -41.80 or -5.1%

Silver Price Close Today : 13.963
Silver Price Close Last Friday: 14.715
Change: -75.20 cents or -5.1%

US Dollar Index Today: 76.170
US Dollar Index Last Friday: 75.044
Change: 1.126 or 1.5%

This week's big story is the US Dollar Index in the past three days. It has risen 112.6 basis points since last Friday. It appears the long awaited dollar rally has arrived. The buck will find it hard to pierce 80, but might even reach 82 - 83.5, roughly a 50% correction of the 92.63 - 74.48 drop.

In case you are thinking the dollar is recovering, pause to ponder a moment that nothing has changed. The dollar is the same piece of government-enforced piece of junk it always was. All of this exchange rate play is just a ploy to fool all of us. Truth is, down at the foundation, neither the dollar nor the euro nor the yen has any value at all. It's just a confidence game.

The GOLD PRICE took another big hit today, & touched its 50 DMA -- good, good, very good. Buying pressure in the physical market is huge, reflected in gold coin premiums. Seasonally, it's time for gold to bottom. Today it closed less than $10 off its last low. Bottom must be very, very close -- Monday? Tuesday? Buy gold, and keep on buying if it drops further. I expect it won't drop lower than $776, if that far.

If demand for gold is huge, demand for silver is colossal. Premium on US 90% silver coin rose 30%, from a 50 cent discount to a 35 cent discount. May not sound like much to you, but if you watch it daily, it's huge. Phones ringing off the wall, frenzied silver buying fever has gripped the American public. This is NOT the behavior of silver about to drop much further, but the way silver behaves when it is about to reverse.

I keep looking over my shoulder for a sudden spike in the Gold/Silver ratio, but with the ratio at 56 & refusing to rise, it will have to spike in the next week or not at all. If your position is too heavily weighted toward gold, swap gold for silver, targeting a ratio below 35:1. Re-weight your position as much as 70% silver, 30% gold.

STOCKS rose 390 points this week in a nearly vertical sharp rally typical of bear markets. Hordes begin to short stocks, then suddenly the index turns & they panic, driving up the price like crazy. Once they've covered their positions, buying power dries up & it drops again. If stocks float here a while & silver & gold remain low, you have an ideal opportunity to swap stocks for silver & gold. Do it now.

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.