Tuesday, August 05, 2008

The Gold Price Could Stop Anywhere Between Here and $846

Gold Price Close Today: 878.60
Change -21.50) Or -2.4%

Silver Price Close Today: 16.537
Change -56.6 Or -3.3%

US Dollar Index Close Today: 73.93
Change 0.43 Or 0.6%

Obviously the silver & gold market are experiencing a paroxysm, a spasm of downmoves. Time for us to reflect what that means, and how it looks. Paroxysms by the nature cannot last long. This one should be finished by the end of this week, perhaps

A friend mentioned an interesting idea, interesting because it fits in with the nature of bull markets. Remember that the bull always tries to shake off as many riders
as possible. My friend mentioned that if gold went down and broke the 846 low, all the mouths would pile on proclaiming the end of the gold market. Perfect opportunity to buy, as a matter of fact.

But what else says that we are not seeing the collapse of the silver & gold bull markets? First, time. Those primary trends have only been underway about 7 years,
far short of the 15 or 20 they usually last.

Here's another point, one that I have learned to ignore at my peril. Premiums on almost all forms of physical silver & gold have risen sharply, and are at highs not seen in a long time. Remember, these are very small changes, but significant because they are usually so steady. Rising premiums can only arise out of rising demand, sharply rising. In fact, there is a sort of backwardation in the market, with Krugerrands offered for immediate shipment at a slight premium. (Stop! Jump to no conclusions. These bottlenecks are normal in a market this active.)

I don't know about other dealers, but we are experiencing HUGE demand. Not only are there many, many people ordering, much of this business is very high dollar, in other words, serious people doing serious buying. Now the Nice Government Men and the bilious Bullion Banks & the black shirts on the futures markets floor can play all the hanky-panky they want, but in the end everything comes back to physicals. When I see extraordinarily strong physical demand like this, I know that a bottom must not lie
far off.

Want a bottom target? Just look around and pick one! Gold could stop anywhere between here & 846, even pierce that some, and silver can stop here or 50 cents lower. It's a paroxysm, so I don't know where it will stop, but I know it will stop soon.

Make you want to puke in your wastebasket? I know, I've felt the same way in the past. But not this time -- not this time.

Buy! Buy! And again I say, BUY!

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.