-- Posted Sunday, 23 April 2006 | Digg This Article
Silver's led us all around the mulberry bush this past week. Even now it's not so clear what next week holds for its direction.
That TV antenna-like symbol for the current week is known in candlestick charting parlance as a "doji".
Long Legged Doji
It's silver's way of saying "I don't know what I want to do!" It's a gigantic doji. I can't recall when I've ever seen one as pronounced, even on a daily chart. It portrays the upward spike earlier in the week, and then the drop, finally returning where it began.
Slow Stochastics overlayed within the price chart has turned down. The MACD indicator above the chart says silver is going to continue up while the Williams %R below the price chart says it's going down. The RSI hasn't yet gone below 70.
It's one of those situations where next week any pundit will be able to tell you "I told you so!" and be right.
On the other hand you don't see this same indecisiveness in gold. Gold knows where it's going and that is UP - unless (Ah, thought you had me, huh?) that Slow Stochastic black trend line follows thru the crossover and is confirmed by a MACD green bar turndown.
So, where does that leave us in the relationship between the two. Which horse should we ride?
Let's look at the G/S Ratio for our answer. Again, we use the weekly chart to filter out the daily noise. We can use the daily chart during the week to try and project what the weekly consensus will end up, but it is extremely dangerous as I've discovered in past experiences.
It's pretty clear that the Ratio has turned to favor gold over silver, at least for the intermediate term, but how far it will go and for how long is anyone's guess. The Ratio could stay within that downward sloping channel as portrayed by
James Turk reported to you earlier in the week, or breakthrough the upper band and go back to test 64. For right now I'd stay put. The call is yours. Always own both.
Giving gold the edge for the beginning of next week is the likelihood of a sharp dollar drop as the week begins. The US$ has now taken out its previous swing low of mid-January. Next target is 86, and then 83. It could get there in a hurry. That monetary crisis element alone gives the nod to gold to fare better than silver in the near term. We're not permitted to know what was secretly discussed by the two tyrants, Bush and Red Chinese "president" Hu. Markets are betting on a Fed Funds rate increase halt, or at least a pause. Only after the congressional elections and we've safely returned the crooks to office will we will step back into the House of Pain.
The markets will tell us, and for right now the bet is Americans will get the shaft. So, what else is new?
- - CV
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-- Posted Sunday, 23 April 2006 | Digg This Article
