Wednesday, January 09, 2008

Gold Prices Are Not So Overbought As to Make Big Corrections Likely.

Gold Price Close Today : 879.50
Change: 1.5 or 0.2%

Silver Price Close Today : 15.734
Change: 0.027 cents or 0.2%

US Dollar Index Today: 76.46
Change: 0.34 or 0.5%

GOLD'S track yesterday & today doesn't look like the end of a move, but a pause for breath after Lap # 1. Tomorrow gold could weaken, but as long as it closeth not below $875, okay. Should start to rise again Friday or Monday. Or, then again, gold might just keep on rallying tomorrow & tear clean through US$900.

SILVER PRICES hit a new high for this move(16.16) and brushed close to its November high at $16.275. 'Twould be normal, usual, ordinary to take a rest here -- a 2-day correction, say, which would create no alarm, given it holds $15.25 or higher.

Neither silver nor gold prices are so overbought as to make big corrections likely. Rather, they ought to make a couple of more squiggles, then blast higher. If y'all are putting off buying silver or gold to see if they will correct, events will prove you wrong. This rocket is leaving gravity's pull behind.

The silly US DOLLAR INDEX rallied about 34 basis points today. That might have accounted for the metals' weakness in the aftermarket. Dollar remains in no-man's land.

Yesterday's commentary warned that new price extremes, high or low, often mark turning points. The art is knowing whether things are turning around, or merely speeding up in the same direction.

So right on cue the Dow about-faced today. Here's how reported it, with a straight face, I promise:

"A sudden, powerful rally kicked in this afternoon [about 2:10 p.m], reversing the waves of selling that have plagued the stock market since New Year's." The reversal began, they tell us, when the Dow hit 12,500, down 80 points from Tuesday.

Now said Dow was long overdue for a corrective rally. Today's rise might have been round number short covering/buying, but then again, it could have been the Nice Government Men on the Plunge Protection Team. I don't know myself, & I think it's ridiculous, a sign of a government gone Looney Tunes, that we even have to consider such corrupt rascality, but there it is. And if I were an NGM on the PPT charged with safeguarding Wall Street's profits, I would not hit while the market is stable, but would wait until the emboldened shorts had o'erreached themselves, & I would rush in buying index options like a drunk at a cardboard box wine sale.

Let it be -- I find such chicanery too painful to contemplate, taking (as it does) all the fun out of the world, & all the truth out of markets. The Dow should (in any event, naturally or man-made) rally toward its 50 DMA (13,279) or resistance a 13,000. How it behaves when it arrives there will discover to us whether this is merely a dead-cat corrective bounce, or the start of a substantial rally.

Truth to tell, I don't much care because I am certain stocks will drop further this year against gold & silver, & I advised y'all months & years ago to swap stocks for silver & gold. Today the Dow's rally didn't take it very far against gold. The Dow in Gold Dollars rallied from yesterday's G$296.40 (14.338 oz) to today's G$299.33 (14.48 oz), yet still hath not managed to climb above G$300.00.

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.