Friday, March 07, 2008

If Silver and Gold Prices Haven't Peaked Yet, What's Going On?

Gold Price Close Today : 972.20
Gold Price Close Last Friday: 972.10
Change: 0.10 or 0.0%

Silver Price Close Today : 20.158
Silver Price Close Last Friday : 19.808
Change: 35 cents or 1.8%

US Dollar Index Today: 73.713
US Dollar Index Last Friday: 73.029
Change: -0.684 or -0.8%

What a week, today was just a top on gold & silver prices doesn't fit yet with (1) time of last cycles, or (2) drop in Au/Ag ratio.

SILVER & GOLD weren't throwing a garden party today, silver jumping around 15 & 30 cents at a lick, up & down, & gold just as bad. Platinum and palladium looked sick as dogs, the platinum price down US$159 while the palladium price fell a mere $34.20.

Looking at this week's daily charts, Platinum & Palladium prices appear to have topped. Gold's Wednesday & Thursday charts together look double-toppy. Gold failed at $992.50 twice, but defended $970 stoutly as support (extend that to $957 on a push). Silver's chart doesn't look quite as weak, with only one peak at $21.20 and very strong buying around $19.80 ($19.40 at the widest).

So what could argue that is NOT a top? Well, everything else. If silver and gold prices peak without making a new low in the silver/gold ratio, it will be the first time that has happened since this bull market began. That would make no sense at all (recalling that often markets do things that make no sense we can see). Also, the time is not quite full yet.

But if silver & gold prices haven't peaked yet, what's going on? Here's a possibility: both metals will correct as they take a rest & a deep breath to push through $21 and US$1000. Correction lasts a few days, then about the time everybody thinks the rally has ended (& the bull has also managed to shake most everybody off) both metals turn skyward again.

I may look stupid standing out here alone, but I just can't argue with that unfulfilled GOLD/SILVER RATIO. Unless the gold price closes below $942 & silver price below $19.50, both silver & gold will reach much higher prices.

Look at that US DOLLAR INDEX. Course, it doesn't HAVE to fit anything, but 'twould be passing odd if the ratio bottomed this cycle ABOVE where it bottom last time, since the ratio is in a primary down trend. My "must hold" number for that is 72.99. It broke that this week, by a little, but came back today to close above 73 -- barely. Jury is still out over whether dollar will continue falling like an anvil out of a 747 Jumbo Jet over the Pacific, or grab hold & rally.

Mercy! Don't y'all think a rally is a mite overdue? How sorry can anything get?

Then there is the STOCK market. The Dow has been flirting with crucial support at 12,000 all week, same way a little boy flirts with a sharp knife until he finally cuts himself good & deep. Like diving into ice cold water, the Dow fell through 12,000 this morning early, then whoo! Shook itself & climbed quickly back above 12,000, then just sank beneath the waves. Just let go. S&P 500 closed below 1,300 support at 1,292.61. If I owned stocks, I'd be puking in my wastebasket. Right now, it appears stocks will follow through downside with much lower prices.

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.