Monday, June 23, 2008

Silver and Gold Prices Dropped From one Side of a Corrective Triangle to Another

Gold Price Close Today : 884.80
Gold Price Close Last Friday: 900.40
Change: -16.50 or -1.8%

Silver Price Close Today : 16.780
Silver Price Close Last Friday: 17.387
Change: 60 cents or -3.5%

US Dollar Index Today: 73.46
US Dollar Index Last Friday: 73.053
Change: 0.41 or 0.6%

Surprise! We're not in the promised land yet. Thus today's turnaround in silver and gold prices should not shock y'all, given all my warnings about chopping back and forth in this narrow corrective triangle.

SILVER and GOLD PRICES were high on Friday, low on Monday. Hmmm . . . What does that say? Perhaps the short-sellers (shorts) threw in the towel last Friday so they could drive out to Long Island for the weekend and enjoy their martinis without worrying about an open position. Then they come back to work on Monday and start the week by selling silver and gold -- hard. "Let's try it again this week!"

Both silver and gold prices dropped from one side of a corrective triangle to another. Looking at today's chart, the gold price went below $900 -- where a raft of open sell orders must have been waiting -- and dropped like a piano off the Golden Gate Bridge. Low was $875.35.

With the silver price $17.20 was key support, and when it hit a nest of sell orders below that, it didn't stop until it hit $16.51.

But note: both metals remain in their corrective triangles, and these lows are higher than previous lows. The 200 day moving averages for both metals (now $16.11 and $860.16) have risen so much since this correction started in March that even if the metals do eventually cap their correction by re-visiting the 200 DMA, it won't be much of a drop.

Once again, as long as silver and gold remain above the 1 May crash lows ($16.11 and $848.90) they are recovering well. Continue to accumulate.

The US DOLLAR INDEX appears to have bounced off its 50 day moving average vicinity (50 DMA now at 72.84) or returned to the median of its recent trading range. It doesn’t look particularly peppy, but the dollar is not out of the running for a rally. Look for one more day testing support of that 50 DMA, then higher prices.

If stocks break 11,750, the elevator cable snaps.

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.