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November 19, 2007

Gold and Silver: Is the Correction Over
by Douglas V. Gnazzo

Honest Money Gold & Silver Report

Gold & Silver

Is the Correction Over

Gold

Gold fell $47.40 for the week, closing at $787.30 for a loss of -5.68%, none of which should come as surprise to readers of this report, as we had surmised last week that gold was overbought and ripe for a respite.

Even the strongest of bull markets must rest and consolidate their gains - if they didn't they wouldn't be sustainable.

Gold is no different and so it has shown. The charts below provide the most likely levels of support. As always there are no guarantees - only probabilities.

The bottom is not falling out beneath gold - bequeathing it to the abyss below, this is more likely the pause that refreshes. First up is the weekly chart that has the parabolic sars indicator affixed.

This indicator is most useful when prices have gone parabolic or straight up in an almost rocket-like direction - one that is not sustainable for any extended period of time, and hence ripe for a correction.

The price indicated is $766.60 - a little over $20 dollars below the current price ($787.30).

The second chart above is a daily price chart. Its bottom trend line offers the first support level at $783.00, which gold has so far bounced off of, and presently resides just above.

Also, on the chart are the various fib retracement levels. The "box" that is between approximately $750 - $725 represents the 50-60% fib numbers. This is the most probable area where support will be found.

It may come higher, it may come lower - this is simply the most probable. Sometimes it works and sometimes it doesn't. If there was a full proof system everyone would be using it, which would render it not so full proof.

Silver

Silver fell $1.09 closing the week out at $14.46 for a significant -7.01% decline.

As the chart below shows, silver has closed beneath what had become resistance turned support, but is not support turned to resistance.

RSI has turned down as well. The middle Bollinger Band at $13.35 offers the first line of major support.

Below is the daily chart of the Silver ETF.

First, notice the large gap down in price. Gaps tend to get filled - not always, but usually; and of course there is the question of when.

Price has already dropped to the middle Bollinger Band, which may be all she wrote, or it may drop further to the bottom line.

Histograms have gone negative, MACD has put in a negative cross, however, volume lightened up considerably on the decline. The last statistic I like.

Hui Index

The Hui dropped a large 29.88 points closing the week out at $412.04 for a loss of -6.76%. This was about 1% more than physical gold fell, which is a slight positive divergence. I wouldn't bet the farm on it, but it is what it is.

Price is fast approaching support that would be good to see hold, but I wouldn't hold my breath. Maybe - maybe not. We shall see soon enough.

RSI bounced off of overhead resistance at around the 70 level and is headed down. STO has put in a negative cross over. There is a lot of support between 375 - 325 going back well over a year.

The 20 ema is at 385.76 and has provided pretty good support just above and below.

Below is the daily chart that shows the bottom trend line has already been broken through. This suggests that there is probably more to come.

The fib retracement levels have been affixed, and the "box" that represents the most probable zone is between approximately 375 - 350. Could be more - could be less.

Summary

There is not much one can say concerning the subprime debt debacle and the toxic exposure from years of wanton usury. It was known thousands of years ago what the ramifications would be.

"If you lend money to any of my people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest."

We are only just beginning to see the retribution of the scourge of paper fiat debt-money, which coils back upon itself like a serpent devouring itself.

In previous editions, personal financial safety measures have been outlined - they should be revisited, and put into affect. The warning signs to watch for have also been given, but will be repeated here again:

• Watch the Yen
• Watch the Yen/Euro Cross
• Watch the TED spread between Libor and US T-Bills
• Watch for permanent open market operations as opposed to repurchase agreements (this will mark the beginning of the end game).

Expect volatility in the markets as players trade on emotions of fear and greed, fed by adrenaline. It appears that several markets are ripe for a change, so be prepared.

See the market indicator table below and the gold stock portfolio for this week's changes. Good luck, good trading, good health, and that's a wrap.

Invitation

Stop by our website and check out the complete market wrap, which covers most major markets, including stocks, bonds, currencies, commodities, and energy, with the emphasis on the precious metal markets, both physical and stocks (39 pages this week).

There is a lot of information on gold and silver, not only from an investment point of view, but also from its position as being the mandated monetary system of our Constitution - Silver and Gold Coins as in Honest Weights and Measures.

On the main homepage are papers and articles by some of the best out there to be had. There are audio and videos on banking, the Constitution, and cutting edge news of serious interest. Many articles are archived, while others are linked.

Live time quotes on gold and silver and precious metal stocks are available, including charts for most world currencies and futures. Links to the World Bank, central banks, international monetary fund, the United Nations, and much more are available.

There is also a live bulletin board where you can discuss the markets with people from around the world and many other resources too numerous to list. Below is a list of some of the stock picks from the past year.

Drop by and check it out. Good luck. Good trading. Good health. And that's a wrap.

Come visit our new website: Honest Money Gold & Silver Report
And read the Open Letter to Congress

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

Douglas V. Gnazzo © 2005 - 2008
All Rights Reserved Without Prejudice

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