Monday, May 19, 2008

Silver and Gold Prices are Drawing an Uptrend, a Series of Higher Lows and Higher Highs

Gold Price Close Today : 905.00
Gold Price Close 12th of May: 883.70
Change: 21.30 or 2.4%

Silver Price Close Today : 16.974
Silver Price Close 12th of May : 17.158
Change: -18.40 cents or -1.1%

US Dollar Index Today: 73.047
US Dollar Index Close 12th of May: 72.940
Change: 0.107 or 0.1%

In the 10 days I was away, basically nothing happened. The Wednesday before we left (7 May) the gold price was at $869.60, the silver price at $16.617, the Dow at 12,814, and the US dollar index at 73.53. Yes, I understand that silver, gold, and the Dow are slightly higher, but they remain range bound.

This reinforces my interpretation that SILVER and GOLD PRICES will not drop any lower. Last week's weakness took silver and gold prices lower, but not to lower lows. Remember that an uptrend is a series of higher lows and higher highs, and that's what the gold and silver prices are drawing.

There remains, like a thin cloud on the horizon, a tiny chance that gold and silver prices will make one last spike bottom, but I would not wait on that. I already urged y'all to buy all your bargain basement silver and gold by mid- to end-May. Go for it now! I think you can safely buy.

Confirmation of that will only come from a gold price close above $960 and silver price close above $18.75. We probably won't see that for a while, as silver and gold prices trade sideways to steadily but not dramatically higher.

The GOLD/SILVER RATIO continues to trade sideways, following silver and gold prices. Since mid-March it has traded sideways with lower highs, building a long narrow triangle. When it breaks out of that triangle, it will drop like a begonia off a 22nd story balcony. Be patient, silver/gold swappers, the Big Swap is coming. I am not troubled that I warned you that it might come in May, but has not yet materialized. Best thing about the swapping strategy is that we are always either in silver or gold, so we can afford to wait patiently for swapping opportunities. If it doesn't come until October, but that won't bother me at all.

STOCKS remain as stagnant as they were when we flew to Seattle. The Dow in Gold Dollars has failed to pierce support at G$300 - G$308 (14.513 - 14.900 oz). The longer this drags out, the lower the likelihood that stocks will outperform gold. That goes double for stocks against silver. Sell stocks & put the proceeds in silver and gold. Otherwise, you guarantee losing your capital.

The US DOLLAR INDEX persists in running from every fight. Yes, it struggled to a slightly higher intraday high (73.89 vs. 73.50 earlier), but it also fell back below 73 again. What's worse, the Moving Average Convergence-Divergence looks like it has already topped. Not even a central banker could work up enthusiasm for this chart. To put it politely, the US Dollar stinks.(Ow! Did I say that? Sorry, George. Sorry, Ben. Sorry, Hank! Didn't mean to blow your cover!)

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.