Friday, June 27, 2008

Everything is in Place for Higher Silver and Gold Prices

Gold Price Close Today : 929.10
Gold Price Close June 20th: 900.40
Change: 28.70 or 3.2%

Silver Price Close Today : 17.57
Silver Price Close June 20th: 17.387
Change: 18.30 cents or 1.1%

US Dollar Index Today: 72.299
US Dollar Index June 20th: 73.053
Change: -0.754 or -1.0%

'Twasn't a good week for stocks & the US Dollar. Mercy.

The US DOLLAR INDEX fell below its 50 day moving average (DMA, now 72.91) and rests now at 72.299, down 75 big basis points from last week. Now it is working on reaching the May low at 71.90. Poor Helicopter Ben Bernanke! Nothing he is trying works!

What's a central banker to do? He'll be laughed out of the monthly suppers at the Bank for International Settlements.

Oil climbed over $140 today. Does anybody in Washington realize that oil over $140, the Dollar Index at little more than half its 2002 rate, gold nearing US$1,000 an ounce, and the stock market threatening to return to 9,750 looks like all the pieces are falling apart, all at once?

The really big down moves in stocks haven't yet taken place. Between 11,750 and 10,680, there's no support, just air. As I have urged since memory runneth not to the contrary, swap stocks for silver & gold.

In the last two days the GOLD PRICE has gained US$49.10 and run slap up against the Big Resistance, the last high at US$928. Does today's marginally higher close constitute a genuine breakout? Let's see on Monday. It must gain on Monday, but cannot fiddle around here at this level. I expect higher prices, next week.

The SILVER PRICE has gained $1.07 in the last two days, but has (unlike gold) not reached its last high at $18.24. The silver price must clear that hurdle before we can pronounce the correction finished. I expect we will see that within the next 8 trading days.

For silver and gold prices, this week was a great show of strength. Both recovered from bad falls and vicious attacks, and rose to levels ready to challenge old lows. Meanwhile the US dollar can't hold on, so everything is in place for higher silver and gold prices.

My friend BL, Technician Extraordinaire, rebuked my anxiety about the gold/silver ratio by reminding me that in strong rallies, gold usually leads silver. Therefore, the lagging gold/silver ratio presents no problem to a metals rally. BL also reminded me of something else, that this leg down in the ratio would be a "3 of 3", that is, a third wave down in a bigger third wave down. Me, I gave up on Elliot Wave analysis years ago as a subject like ballet, which I simply cannot parse. But BL loves Elliot Wave, and he sees a "3 of 3" coming in the ratio, which means (1) a huge move down in the gold/silver ratio and (2) a huge move up in silver and in gold 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 $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.