Friday, June 20, 2008

Today Both Silver and Gold Prices Broke Out

Gold Price Close Today : 900.40
Gold Price Close 13th of June: 870.30
Change: 30.10 or 3.5%

Silver Price Close Today : 17.387
Silver Price Close 13th of June: 16.54
Change: 84.70 cents or 5.1%

US Dollar Index Today: 73.053
US Dollar Index 13th of June: 74.04
Change: -0.987 or -1.3%

The following appeared today on the UK Telegraph newspaper website:
"The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

Such a slide on world bourses would amount to one of the worst bear markets over the last century."

Now let's look at the week's results. The SILVER PRICE climbed 84.7 cents, the GOLD PRICE rose US$30.10, the gold/silver ratio dropped 0.83, stocks took a beating (mostly today), and the US Dollar Index proved once again that the dollar can't be trusted.

Both SILVER and GOLD PRICES have been trading into long narrow triangles, a typical corrective pattern. Both were also being squeezed between their 50 & 200 DMAs. Today both silver and gold broke out, barely, above their down trend lines, and above the 50 DMAs. Yet this only constitutes the first step of a rally. Next they must beat the last highs at $18.24 and $928. Remember that markets are thin this time of year, and corrections like this are choppy, so we could see spikes up and down, but silver and gold prices have already made their bottoms on May 1. Use this time to buy more silver and gold.

As I suspected, stocks broke that support at Dow 12,000 and flew like a lead Zeppelin. Today the Dow lost 220.40 while the S&P shed 24.90 points and dropped nearly to the 11,750 support level. Between 11,750or so and 10,680, there's not much but cobwebs. Below that stocks are headed for 9,750. It's still not too late: swap stocks for silver and gold.

The US DOLLAR INDEX last Friday finally closed above 74.00, then spent all this week giving up those gains. Right now it's up to the dollar to prove itself. The 50 day moving average stands at 72.80. If the dollar can't defend that point, then there's no rally in its future, only more downside.

The DOW IN GOLD DOLLARS dropped G$16.50 (0.798 oz) this week. When it breaks through G$250 this time it will just free fall. Pick a number -- no telling where it will stop as stocks lose more value more rapidly against gold. Against silver stocks are faring even worse.

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.