Friday, March 14, 2008

Silver and Gold Prices Have Come Out of a Short Correction to Resume the Rally

Gold Price Close Today : 998.10
Gold Price Close Last Friday: 972.20
Change: 25.90 or 2.7%

Silver Price Close Today : 2057.5
Silver Price Close Last Friday : 2015.8
Change: 41.70 cents or 2.1%

US Dollar Index Today: 71.649
US Dollar Index Last Friday: 73.029
Change: -1.380 or -1.9%

Last week I suspected that SILVER and GOLD PRICES were entering a short correction, about 6%, then would shortly come out of that to resume the rally. From today, it seems that was correct. Tuesday's lows were US$969.90 for gold and $19.676 for silver and then they began to rise again. The gold price has made a new high, but so far silver has not. That's the one last puzzle piece that must fall into place to absolutely cinch that theory.

We are now within probably 30 trading days of the blow-off highs, unless this rally takes a bizarrely different turn compared to the last rally. It's somewhat remote, but there's always a chance the corrupt incompetents in Washington will mismanage the crisis and push the dollar over the edge into the abyss that bottoms at the center of the earth. Assuming that doesn't happen, the silver price can move to $24 - $27 and the gold price to US$1,100 or higher before a long correction begins.

Recall that one month ago silver stood at $17.09 and the gold price at US$902.80. That's right, gold has added nearly US$100 and silver $3.24 in one month. Over the next 30 days, they will add even more.

The Gold/Silver Ratio is probably within 5 weeks of hitting its trough. If you want to swap silver for gold, better get ready.

These nose-bleed silver & gold prices are making me philosophical. Folks, something is boiling under the surface that we're not seeing, & it's huge & threatening. "If they do these things in the green tree, what will they do in the dry?"

On Tuesday the Federal Reserve announced some new "facility" that, essentially, would swap the banks US Treasury bills for the rotten mortgage-backed securities & other dog-paper -- to the tune of $200 billion bucks.

Wild with joy that Bernanke really was bailing out Wall Street (as if the rest of us out here in "flyover country" ever doubted that) the stock market jumped up more than 400 points. Yet here I am, hard-hearted, steely-eyed realist, ready to remind all those fooled by stocks that for all the smoke, mirrors, & hogwash, at the week's end, stocks stood only 57.4 points higher than last week -- and only then because SOMEbody (read: Nice Government Men) suddenly decided to buy in the day's last hour, & then returned with MORE buying the last 15 minutes.

Dow has formed an enormous head and shoulders top, then broken down form that top, then rallied back to the neckline. The future is clear: stocks will drop much further unless they clear 12,700 suddenly. Swap stocks for silver & gold.

Today the Dow in Gold Dollars fell below G$250.00 to close at G$248.97 (12.044 oz), down from its 1999 high at G$925.42 (44.767 oz). Dow in Silver Ounces closed today at 580.85 oz., down from its 2001 high at 2,566.04 oz. in 2001. Y'all do the math, then factor in the 6-7 years left to run on the metals bull market, and ask yourself, "Do I really want to leave my money in stocks?"

The "Management" has decided to let the US dollar fall. And fall. And fall. Don't get caught beneath 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.