Tuesday, December 11, 2007

The Silver Price Offers One Reason not to Expect Gold to Drop Lower

Gold Price Close Today : 811.40
Change: 3.70 or 0.5%

Silver Price Close Today : 14.695
Change: 21 cents or 0.1%

US Dollar Index Today: 76.28
Change: 0.2 or -0.3%

The GOLD PRICE closed up 3.70 at 811.40 shortly before the communists at the Fed made their announcement. After that the gold price dropped US$15 to US796 in the after-market. If the gold price is headed lower, it will break 795 support tomorrow.

The SILVER PRICE offers one reason not to expect gold to drop lower. Silver broke like gold today, from a slightly higher close at 14.695 to 14.45 in the aftermarket. It was that 14.45 close that caught my eye, because it had been resistance for weeks. Oh, maybe it will drop a dime or 20 cents early in the day, but provided it close tomorrow above 14.45, silver shouldn't drop any lower.

Lo, the Fed hath spoken, & nobody much liked what he heard. Comrade Bernanke & the Commissars of Money lowered its main short term rate by 0.25% and lowered its 'discount rate' (charged by the Fed to borrowing banks) to 0.25%.

STOCKS responded by dropping 294 points -- wow, that Fed really knows how to manage the economy, huh? Closing at 13,433 the Dow fell below its 50 day moving average (13,545) but not quite as far as the 200 DMA at 13,280. Dow would look very weak if it fell below 13,200. I know many expect a rally into year end and beyond, but my doubt persists. Anyway, I'm sure I want to swap stocks for silver & gold.

The US DOLLAR INDEX interpreted today's Fed interest rate cut as good for the dollar, and it rose over 20 basis points to close at 76.277. That brings the dollar closer to its 50 DMA at 76.70, and the last intraday high at 76.82. Slow as it is, you still have to call that a rally. This won't help silver & gold, but it certainly won't be fatal, either. Just one more hurdle to jump.

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.