Thursday, May 01, 2008

Buy Some Silver Here. It's on Sale. If it Drops Further, Buy More.

Gold Price Close Today : 848.90
Gold Price Close Last Friday: 862.80
Change: 13.90 or -1.6%

Silver Price Close Today : 16.121
Silver Price Close Last Friday: 16.502
Change: -38.1 cents or -2.3%

US Dollar Index Today: 73.24
US Dollar Index Last Friday: 72.61
Change: 0.64 or 0.9%

Whew! That was some kind of reversal today. Yesterday after the market closed both silver and gold shot up, and it looked like a perfect key reversal -- break into new low territory then higher close -- but it obviously wasn't. Just as metals appeared yesterday to have turned up, stocks looked to have broken down.

The GOLD PRICE closed today down $13.90 at $848.90, after a high of $877.88 and a low of $845.90. Very simply, the gold price is locked in a downtrend. In time it has already fulfilled the profile of these waterfall crashes, but keeps falling. Support stands right here, at $848, then at $837, and $800, where the apex of a previous triangle stands. The 200 day moving average, another support area, stands at $821.95.

After yesterday's strong aftermarket, the $16.60 SILVER PRICE level broke early this morning then waterfall-ed to a low at $15.96 and spent the rest of the day bouncing up on $16.20. Support beneath us lies at $16.00, $15.25-$15.30, $15.00, and $13.74. Looking at past waterfalls, this one has lasted long enough. Expect silver's price low within the next two weeks longest. Don't forget the danger of looking so hard for a bottom that you miss it. Buy some silver here. It's on sale. If it drops further, buy more. It's on sale.

Today stocks broke 12,950 and then ran to close at 13,010. On 30 April I missed a new high close on the Dow Transports, which means higher stock prices if the Dow Industrials confirm with a new all time high close. That Dow Theory signal is normally very powerful, but remember the Transports must be confirmed by the Industrials. This rally finds itself (as also metals) outside -- way outside -- the seasonal pattern, assuming it has two to three months to run. Nor is a stock rally bad news for metals, since silver historically outperforms gold when stocks are rising. That should bring us closer to that lower ratio where swapping silver for gold will be profitable.

The US Dollar Index is headed higher, faster than we're accustomed to see. It closed today above its 50 DMA, up about 64 basis points at 73.242. Expect the dollar to teach all its despisers a lesson. 74.50 is first resistance, then 75.20. It could peak anywhere form 75.20 to 77 over the next two to three months.

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 $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.