Monday, December 17, 2007

Silver & Gold Prices are not Rising Due to the Dollar's Depreciation Alone, but Due to Depreciation in all Fiat Currencies

Gold Price Close Today : 794.80
Change: 1.50 or 0.2%

Silver Price Close Today : 13.826
Change: - cents or 0.0%

US Dollar Index Today: 77.41
Change: 0.01 or 0.0%

On Friday the US Dollar Index rose 86 basis points. As I have been warning, silver & gold did not like this, not to mention stocks. The Dollar Index has long been overdue for a rally, so this holds no surprise, nor should it surprise anyone that silver & gold dropped on that rally. However, after they have a short while to digest the higher dollar, up they will move again.

Silver & gold prices are not rising due to the dollar's depreciation alone, but due to depreciation in all fiat currencies. People act as if the Euro or Yen were somehow "better" fiat currencies than the dollar, but they're just as sorry.

The GOLD/SILVER RATIO has broken out to the upside, closing today about 57.5. If you are ever going to trade gold for silver, now is the time. Top of possible move is 58.5 - 59. Trading right now might be a bit early, but definitely trade at 58.

Last Friday's break in silver & gold took them below established support, & can be expected to drop further. Yeah, but how much further is the question. GOLD's downtrend line is still intact, but it broke through what had been support around $795. 50 day moving average stands at $788.43, & that's a likely place gold might stop.

The SILVER PRICE broke $14.00 support. 200 DMA stands at $13.34, and of course that's one target, but support at $13.80 is also strong. I've learned that silver sometimes makes its extreme move in the first few days of a break, so we may have seen the low.

Although the possibility looms that silver & gold can drop further, I would buy heavily here, scale down. Buy some, then if it drops, buy more. We are in a full-fledged bull market, & in that kind of market, scale down buying works.

The Dow in Gold Dollars (DiG$, the Dow in terms of gold dollars) had rallied after its after its new low at G$318.92 (15.427 oz.) all the way to G$354.56 (17.52 oz). Whoops. That only took it to the downtrend line, where it failed. Stocks are fixing to drop much further against 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.