Wednesday, August 13, 2008

Silver and Gold Prices Rose Smartly Today, But as Yet that Says Little

Gold Price Close Today : 825.00
Change: 16.80 or 2.1%

Silver Price Close Today : 14.824
Change: 36.2 cents or 2.5%

US Dollar Index Today: 76.48
Change: 0.16 or 0.2%

SILVER and GOLD PRICES rose smartly today, but as yet that says little. Any market that has fallen as fast as silver & gold (since 28 July, 12.9% for gold & 16.2% for silver) will, even if destined to fall much further, at least turn around and feebly rally. Until we see how far those rallies carry, we can't know much.

The GOLD PRICE rose $16.80 to close at $825 (significant number) and the SILVER PRICE closed at $14.82, up 36.2 cents. Ahh, we are back to old numbers, and old resistance areas! $14.86 was silver's high in 2006, remember? $850 is the big number above for gold.

Number me not among those who believe silver and gold have fallen out of their bull market into a bear. Not so. Silver & gold remain well within usual correction bounds. In 1987 the stock market, then in a bull market from 1982, fell 30.7% in four days(from 2508.16 to 1738.74 on 10/19/87), and 35.8% from that's year's high in August. Cries of "Bull Market Is Over!" rang out, but as well all know, the Dow was then still 12 years from its ultimate top against gold (August 1999).

Be calm. Keep your eyes on the horizon, and on the primary trend, and buy silver and gold. Like Odysseus passing the sirens, tie yourself to the mast & stop your oarsmen's ears.

Y'all know that I rely heavily on the DOW IN GOLD DOLLARS, which is the Dow's value converted to statutory dollars of gold (0.048375 troy ounce fine gold). For the 12 years I've been watching, it has been the very most reliable indicator I've ever used. If it says stocks will rise against gold, they rise. If it says stocks will fall against gold, they fall. If it says a rooster dips snuff, you can look under his wing for the brush.

So what's the DiG$ saying now? Yesterday it made its highest close so far in this move, G$297.79 (14.406 oz), up from a low at G$231.86 (11.216 oz) on 15 July. To correct 50% of the fall from G$432.45 (20.920 oz) the DiG$ would have to climb to G$332.155 (16.068 oz). Even the least of the commonly seen corrections, 38.2%, would take it to G$308.49 (14.923 oz) far above the high seen thus far.

However, it did touch the 200 Day Moving Average today at G$292.20 yesterday. Today's close at G$288.98 throws the DiG$ back below the 200 DMA. As y'all may remember, markets in primary downtrends at long intervals return to their 200 DMA, which offers a great opportunity to sell them again.

How to interpret the DiG$ now? Until it makes good that touch against the 200 DMA, and crosses the 50% correction at G$332.155 (15.584 oz), and then the 61.8% correction at G$355.82 (17.213 oz) and continues to climb, I have to conclude the Dow remains in a bear market against gold. Short term the DiG$s is whispering that stocks' rally has not much further to run.

Buy silver & gold.

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.