Wednesday, November 21, 2007

Lagging Silver Price Hints that this Gold Rally Has a Much Longer Course to Run

Gold Price Close Today : 797.60
Gold Price Close Yesterday: 790.3
Change: 7.3 or 0.9%

Silver Price Close Today : 14.400
Silver Price Close Yesterday: 14.478
Change: -7.8 cents or -0.5%

US Dollar Index Today: 74.96
US Dollar Index Yesterday: 75.11
Change: -0.15 or -0.2%

The GOLD PRICE closed today up $7.30 at $797.60 but rose another four dollars in the aftermarket. These repeated rises in the aftermarket are not usual, & signal strength. We may have seen the seasonal gold low on Monday, although it's possible a lower low will be made between now and 2 Dec. Either way, within a couple of weeks the correction will have ended & the gold rally resumed. Get gold, & get out of the way!

The SILVER PRICE continues to lag gold, as the ratio at 55.42 shows. Is this a bad thing? No, it reflects (1) silver's relatively greater weakness in times of financial panic, such as we have now, & (2) silver's tendency to lag gold in the first half or so of advances. Thus lagging silver hints that this gold rally has a much, much longer course to run. Buy both silver & gold. Spend 70% of new money on silver, 30% on gold. If the Gold/silver ratio reaches 58, trade gold for silver.

If y'all haven't cast your eyes on charts of those mortgage-making machines, Fannie Mae & Freddie Mac lately, go to, & enter "FRE" & then "FNM" in the "Symbol" box. While you're at it, enter "CFC" & take a look at Countrywide Financial, nation's used-to-be largest mortgage originator. Lo! How are the mighty fallen! FNM & FRE look like they've fallen off a cliff in the last 2 months, and CFC fell off its cliff in April. Before y'all's eyes is played out the real estate & subprime crisis. Nor has it ended -- next year thousands of adjustable rate mortgages will be ratcheted upwards. Let the foreclosures begin!

Bernanke never said it, and thus fooled all of us who neglected to keep foremost in our minds that all fiat currency exchange rates are manipulated. He never said the "D" word -- devaluation. Still, that's exactly what he's done, devalued the dollar. More accurately, I should say begun the devaluation. No telling what the eventual target will be, but 60 is a good guess. This will be a "slow burn", gradually eating away the dollar's value with miffy little rallies that won't mean anything. Dollar index today fell another 15 beeps to close at 74.960. Y'all had better get out of dollars & dollar-paying investments while there's still time -- & a little bit of value left. Get silver & gold, get Cadillacs, get land, but get out of dollars.

Today settled all controversies in the stock market. The Dow Jones Industrial Average closed below August's low, 12,846, to give a Dow Theory signal that a bear market has started. Argue with it if you want, but you'll be found wrong in the end. Swap stocks for silver & 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.