Thursday, January 17, 2008

If the Gold Price Drops Below $860, then the Rally Has Ended

Gold Price Close Today : 879.50
Change: -1.10 or -0.1%

Silver Price Close Today : 15.93
Change: -12.3 cents or -0.8%

US Dollar Index Today: 76.20
Change: -0.11 or -0.1%

Sorry I missed sending a commentary yesterday. I had to deliver some pigs to Sequatchie and pick up a Jersey cow.

If the GOLD PRICE drops below $860, then the rally has ended & gold is beginning a much larger correction which would carry down to $820 or $800. Indicators like RSI and MACD strongly suggest correction lies in store.

Silver's chart resembles gold's, but both have me scratching my head. Both broke out of consolidations. Normally that should send them a lot higher. Both metals are strong against the yen and the euro. Both have also reached the top of their Bollinger bands. That's a measure that shows the upper & lower limits of " normal" price movements.

So why am I fighting so hard against the conclusion that a correction has come? I don't know. Neither metal has run as far up as I thought it should. But now I am imposing my expectations on the market, instead of listening to what it says. I will put my hand over my mouth, & wait.

STOCKS, on the other hand, seem to have reached the limit of lowness, only to go lower. The Dow chart looks like the silver & gold charts turned upside down. They have fallen as far they ought to have fallen for this drop, yet they fall further. Either this drop is drawing to an end -- even if only for a 3 week rebound -- or the bottom is going to fall out of stocks and the world.

The US DOLLAR INDEX looks like it has confirmed an uptrend with a double bottom above its December low in a series of higher lows. Don't expect the dollar to make a big rally quickly, and the chart doesn't say anything about the dollar collapsing any time soon.

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.