Thursday, December 13, 2007

Gold has Been Forming an Even-sided Triangle That Could Break Up or Down

Gold Price Close Today : 799.00
Change: -14.50 or -1.8%

Silver Price Close Today : 14.072
Change: 58.3 cents or -4.0%

US Dollar Index Today: 76.53
Change: 0.25 or 0.3%

Today's action just shows how bewildered this market action has left me. Gold & silver prices fell off after the Fed's action, which was logical as the smaller 0.25% rate cut would not damage the US dollar as much as the expected 0.50% cut. When they failed to break below support ($795 & $14.45) that looked strong. Closing higher yesterday clinched that interpretation -- and then today, both metals fell. Gold didn't break that support, but silver fell all the way to the bottom of its range.

For the SILVER PRICE, $14.00 holds strong support, with $13.80 just below that. The Gold-Silver ratio today jumped over the downtrend line, so maybe we are seeing the ratio spike my friend BL has been expecting. Gold meanwhile has been forming an even-sided triangle. That could break up or down, but given gold's trend, should break out upside.

To me it seems you have to buy silver & gold here, counting on that resistance to hold. The gold price is too close to finishing its chart pattern to wait, & the window for seasonal lows is rapidly closing.

The S&P500 still looks like a top to me, with the Dow not far behind. This week's Dow chart looks like the inside of a meat grinder -- bloody. I still can't figure where the permanent bulls' optimism comes from, except that they expect the future to replay the past forever. Next year will wreak pain, tooth-gnashing, and mourning on the US economy. Stocks will take their share of the beating. Lo, ye have your warning! Swap stocks for silver & gold.

The US Dollar continued rallying today, having defended 76 as support.
It rose 25 basis points to close at 76.53. Even if the dollar began rallying very fast, it still would hit the downtrend channel line about 79. More likely it will slowly rally and top out at 78 or less. That's inspiring, huh?

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.