Sunday, March 25, 2007

The BIG PICTURE: Weekly Review 3-23-07

And so, as expected, dem Rat Bastids circled their wagons Friday and tried to steal the bait in our trap. Do the number of "existing home sales" include homes sold that are in foreclosure? Anybody predicting or remotely suggesting that this number in anyway proves that the subprime meltdown will be contained has got to be blind, high , or both. This number is just another horn blowing...daily "noise" amplified by the media to try and take your eye off the Big Picture.

Courtesy of I have pasted the Big Picture above in 3-D: Gold, Silver, and the US Dollar. [Please click on the charts to enlarge.] These three weekly charts need to become your best friends.


The first chart is of SLV, the silver ETF. I chose this chart because it best portrays the spot price of silver and it contains volume information. Clearly, silver has been consolidating last Springs massive parabolic rise with the low established the week of June 12, 2006. The associated Ascending Triangle has very solid support running along the 50 week moving average and has now offered three excellent buying opportunities in silver off that June low.
It may have slipped past most folks radar, but SLV established a new closing high five weeks ago with the February 20, 2007 peak. Silver was on the verge of breaking out, and along with gold, was mysteriously kicked off the tracks as the Chinese Stock Market Hiccup felt round the globe unleashed a wave of fear over investors and speculators alike. At a time when silver and gold should have been held aloft as "safe havens" in a Market Meltdown, they were both kicked to the curb even as the US Dollar's decent into oblivion gathered speed.

Take note of the high volume [green arrows] that coincided with each bottom in silver circled in green above. These are blow-off bottoms. Blow-off bottoms are where savy investors and speculators, sensing "blood in the streets" step in and buy as the heard sells in a panic.

The top Of this Ascending Triangle consolidation in silver is 14.46. This red line in the sand is the launching pad for silver. A solid weekly close above this line on "big" volume should be the signal that silver is on it's way towards it's next intermediate peak. Using the June 12 low of 9.55 that projects to an intermediate peak of 19.37.


Gold like Silver has been consolidating last Springs meteoric rise and subsequent "crash" for the better part of the past year. Much like Silver, a breakout in Gold five weeks ago was thwarted as the chicken littles of the world ran about screaming "the sky is falling" when the Chinese Stock Market sneezed. Gold too, has solid support along its 50 week moving average. The support there has offered excellent buying opportunities.

658 repesents a 61.8% Fibronicci retracement of last Springs Gold Dump. Only the salvation delivered by Friday's "existing home sales" numbers averted a close above that line for the past week. Gold is clearly on track to retest the 730 highs from last Spring.

If you look closely Gold has also been consolidating within an Ascending Triangle. The line in the sand at 658 has, IMO, been breached and we are now in the process of retesting that line and the break of it. Once Gold again smashes thru this line and establishes it as new support Gold should get the "OK to throttle up" and be on it's way to it's next intermediate peak. Based on the June 12 low of 542.30 that projects to an intermediate peak for Gold at 773.


Where is the US Dollar absent Friday's "existing home sales" numbers? Closer to the BIG LINE IN THE SAND at 80 than it is presently. The US Dollar is clearly on the skids, and the edge of the cliff is getting ever closer. The US Dollar is dangerous. Rat Bastids everywhere can print the stuff out of thin air. Don't try this at home, you'll end up in jail. This weeks economic numbers "should" offer the US Dollar little in the way of support. To see a list of this weeks economic numbers on tap: . I expect the US Dollar to continue it's slow slide into the Dustbin of History going forward. There will, of course be, "signs of hope" along the way. We'll most likely see the first when the US Dollar gets down around the bottom of it's downtrend channel [green arrow]. I'd like to think that Silver and Gold will both be at or near their intermediate peaks at about the time the PPT comes to the US Dollar's rescue.

Silver Resiatance: 13.25 / 13.32 / 13.54
Silver Support: 13.10 / 13.03 / 12.90
Gold Resistance: 658.30 / 662.10 / 668.50
Gold Support: 655.50 / 650.90 / 647.80

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