Wednesday, July 23, 2008

Buy Gold and Silver with Both Hands on Every Silver and Gold Price Retreat

Gold Price Close Today : 922.40
Gold Price Close Yesterday: 948.00
Change: -25.60 or -2.7%

Silver Price Close Today : 17.40
Silver Price Close Yesterday : 17.945
Change: 54.5 cents or -3.0%

US Dollar Index Today: 72.81
US Dollar Index Yesterday: 72.49
Change: 0.32 or 0.4%

Ahhh, when you're wrong, you're wrong, & this morning proved me wrong. The SILVER PRICE slammed down 54.5 points to close at $17.40 (down nearly 100 cents in 3 days' trading) and gold dropped $25.6 to $922.40 (down almost $40 in 3 days).

The correction is of a larger degree than I suspected. Looking at the SILVER and GOLD PRICE charts, it appears to be a pullback to the breakout point.

Draw a descending line across the April & May tops. That upper boundary of the corrective triangle comes out today a bit below the 50 day moving average ($912.78) around $905. No surprise, $905 was heavy resistance on the way up, and should prove heavy support here.

Drawing the same line across silver's April & May tops shows you that silver has already fallen back into the triangle, and below its 50 DMA $17.53).

However, if you check the Fibonacci correction from the $19.55 recent high, you'll find that 38.2% lands around $17.30, about today's low of $17.29. Silver could drop to $17.00 or $16.50. What!! How is this possible? The silver price is MUCH more volatile than the gold price because it is a MUCH smaller market. It always swings wider than gold, tops and bottoms.

Far from being embarrassed by my recommendation yesterday to buy with both hands, I am pleased silver and gold dropped to even lower prices today, so I can say yet again, buy with both hands on every price retreat.

What might contradict my outlook? A gold close below $850 would change everything, & force me to re-examine all presuppositions.

The GOLD/SILVER RATIO raced today up toward its 200 DMA (53.318) to stop at 53.011. It has formed a broadening top or megaphone, as the tops climb barely higher and the lows lower. Usually this breaks out downward.

STOCKS rose 29.88 points, call it unchanged. I'd rather own gold falling 25.60 in a day than the Dow rising 29.88 in a day. A BIG drop is coming in stocks. Wait for this little rally to wear itself out.

The US DOLLAR INDEX rose 32 basis points today to 72.805. Who knows whether it means anything? It remains locked in the same old trading range, and, of course, remains the same crummy fiat currency it was yesterday & forever.

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.