Friday, January 18, 2008

Silver and Gold Prices May Trade Downside the First Couple of Days Next Week

Gold Price Close Today : 880.80
Gold Price Close Last Friday: 896.10
Change: -15.3 or -1.7%

Silver Price Close Today : 16.138
Silver Price Close Last Friday: 16.273
Change: -13.5 cents or -0.8%

US Dollar Index Today: 76.384
US Dollar Index Close Late Friday: 76.019
Change: 0.365 or 0.5%

In the past couple of months gold and silver price corrections have not offered us that second chance markets usually extend to the patient. I mean that instead of correcting in 3 waves -- A down, B up, C down -- the corrections have fallen to an initial low, then turned up without looking back. Today has persuaded me that although silver & gold prices may trade downside the first couple of days next week, gold prices shouldn't break $850 nor silver $15.73. The market has handed y'all a buying opportunity -- seize it! More rally is coming!

Today the GOLD/SILVER RATIO broke down into new low territory, 54.59. Does that signal the second phase of a metal's advance, the one where silver runs faster than gold? I think so.

The US DOLLAR INDEX rose 18 basis points, but is still lolly-gagging along -- not terribly inspiring. The Dollar is like the least ugly dog in the pet store window. It's awfully ugly, but not as ugly as the other dogs (the Euro & Yen).

Stocks have indeed fallen lower ("Lo,how are the mighty fallen!") as I expected last week, but silver & gold hit a snag (as Red River pilots might say), while the US Dollar Index managed to inch higher. What meaneth these things? Stocks ought to stage some sort of rally around here, say, off 12,000.

Their weakness portends weighty & sad things for this year. The S&P500 has been beaten up worse than the Dow. The Dow in Gold Dollars (DiG$) and the Dow in Silver Ounces were both warning us that stocks were poised to lose a lot of ground to silver & gold. Both the DiG$ & the DiSoz have now made new, never before seen in this bear market lows. The DiG$ hit G$300 (14.513 oz) & believe it or not, it's record since has recalled the panic of the 1929 crash, although not as crazy.

On 25 October 1929 the Dow closed at G$301.22. The next trading day, 28 Oct., the Dow closed at G$260.64. On 8 January 2008 the Dow closed for the first time below G$300. Eight trading days later it closed at G$283.96 (13.737 oz). Not nearly as bad in 2008, but full of fear nonetheless. By the way, that 1929 slide didn't end until it hit G$198.69 on 13 Nov. 1929. Equivalent Dow today would be 8,458.23. I'm not predicting the Dow will hit that number soon (I actually expect a small short rally) but it do pique the attention, now don't it?

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.