Wednesday, December 19, 2007

World's Central Banks Hit Panic Button, Injecting $0.540 TRILLION Dollars Into the Financial System in One Day

Gold Price Close Today : 801.10
Change: -1.90 or -0.2%

Silver Price Close Today : 14.073
Change: 0.059 cents or 0.4%

US Dollar Index Today: 77.57
Change: 0.19 or 0.2%

Metals seem wedged in the spot, not able to rise but not able to be forced down. The US DOLLAR INDEX continues to rally, which no doubt adds to metals' difficulties. Certainly no runaway rally, but likely to continue for 2 - 3 months.

Big news today! Somebody in central bank land is scared. The Euro central bank on Tuesday stunned everyone by pumping $500 billion (half a trillion dollars) into the markets. The ECB's action effectively reduced the London interbank offered rate (Libor) by 50 basis points. Across the Channel the Bank of England auctioned off cheap loans at 14 bps below the base rate, to the tune of $20 billion. The Federal Reserve injected $20 billion into the US by the same means.

Let's see . . . The world's central banks, obviously working together, inject $0.540 TRILLION dollars into the financial system in one day. Would that classify as pushing the panic button? Is a pig's rear pork? Can a duck swim? Does a bank suck blood? Of course! You can hear the sweat dropping off their foreheads from Tennessee. Scares me, I'll promise.

GOLD shed a buck today to close at $801.10 -- good that it closed over $800, not so good that it failed to advance. Gold has formed a tight corrective triangle. As long as it holds above $792, trend remains in force. A break below $792 would forecast a stout fall, say to $750 or even $720, but for now I don't expect that outcome. Between now and New Year most likely gold will keep on treading water. No trader likes to see big breakouts on holidays.

SILVER rose five cents today to close above $14.00 at $14.073. That's okay, as far as it goes, but nothing inspiring. Silver's performance at 13.80 makes me conclude that we have seen the bottom already. Once gold begins rallying again, it will be time for silver to begin outperforming.

STOCKS today disappointed their promoters by falling back to 13,000. Whether the Dow rallies into year end or not, the chart shows an indelible topping pattern. Expect much lower prices next year. Swap stocks for silver & gold while you still have time.

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.