Wednesday, July 16, 2008

Fear is in the Air, and it is NOT Fear from Silver and Gold Buyers - Buy Any Retreats

Gold Price Close Today : 961.80
Change: -15.90 or -1.6%

Silver Price Close Today : 18.735
Change: -20.6 cents or -1.1%

US Dollar Index Today: 72.04
Change: 0.31 or 0.4%

Sorry I missed y'all yesterday. We were covered up with orders plus we are helping finish our log building for our church. Too much work, not enough people.

But y'all shouldn't have missed me since it was obvious what was happening. The GOLD PRICE moved close to US$1,000 and the fight began with the short sellers. They hit the SILVER PRICE, too, and the volatility was awful, with gold moving $4 or more on a tick (a single trade). Crazy. Hard to trade.

That sort of volatility can occur at tops, or at crucial resistance. Which is this? Because metals only lately broke out of a long correction, it's far more likely crucial resistance than a top. Another thing that points to that: the buyers back off only slowly, grudgingly.

Long and short of it is that both silver and gold prices are bouncing back from obvious resistance, but quivering to get through that resistance. US$950 and $18.50 are most likely support here, but things are so volatile you have to cut the metals some slack. This retreat won't last more than a couple of days. Fear is in the air, and it is NOT fear from silver and gold buyers. Buy any retreats.

Stocks climbed 276.74 to close at Dow 11,239.28. One thing you have to remember to keep from being mauled and eaten by a bear market is that bear markets stage sudden, sharp rallies. So stocks today. So it rallies to 12,000? 12,250? What changes? Nothing. So, then, why would you want to hold stocks? No reason. Sell while you can still find buyers.

The US DOLLAR INDEX rallied today 31 basis points to close slightly over 72 at 72.042. Yaaawn. We've seen this act before. Does it mean anything? Who knows? Nobody has accused the dollar of sincerity recently.

Remember the scenes from the old Tarzan movies? Walking through the jungle, all the bearers suddenly grow quiet. They cock their heads. The safari leader, clutching his rifle, asks the lead bearer, "What is it, Mbwezi?" Dimly in the distance the throb of drums grows louder. The female star creeps closer to the safari leader, grabbing his arm and scooting behind him. The drums throb louder. The bearers drop their loads.

Now if you've seen one Tarzan movie, you know that the Ngali, the most bloodthirsty tribe in all of Africa who specialize in dicing their victims while still alive, are about to attack. You know that unless Tarzan shows up pretty soon, the entire safari will be salsa.

That scene is where the US dollar is right now, hiding behind safari leaders Bwana Ben and Bwana Paulson, while the wild tribes of bond & currency Ngali circle in the jungle, waiting for their chance to bring down the whole safari. Can't you hear the drums throbbing in the distance? Bad juju.

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.