I’ve been away on vacation since the middle of last week and did not write the weekly Gold & Silver Report. Needless to say, a bit of action occurred over the past few days. I will write a full market wrap this weekend, but I want to mention a few things because of what has transpired in the markets and in response to all the emails and messages I’ve received.

Fundamentally, nothing has changed – if anything, things are worse as far as financial markets of paper are concerned. All markets, even gold – are priced in paper dollar bills or Federal Reserve Notes. This is the most deceptive aspect about financial markets and is the force behind gold that will not be denied.

Paper is paper, and this is presently being played out in the gold stocks, which although they produce gold, are still pieces of paper shares of stock. This clearly shows why physical gold and silver are much safer and more precious than gold and silver stocks.

The precious metal stocks have dropped much further than the physical metal. This means the stocks are undervalued to physical and/or physical is overvalued to stocks. A correction or rebalancing will take place accordingly.

It remains to be seen if the gold stocks rise while the metal sits, or if the stocks sit and the metal falls, etc. Today’s action is indicative of this theme as I write this with 15 minutes left to trade.

The long term trend is still intact. This is clearly shown on the monthly charts. I have said for weeks that I thought we were not yet at an intermediate term low, which would not occur to later this summer or fall. Unfortunately, that seems to be the case. Short term things are oversold, but they can still go further and remain there longer than one thinks possible.

The band is playing and performing well into the elections, however, the fat lady has not yet sung. Panic has taken hold in the pm markets, and the sharks are circling – smelling blood and waiting to pick up the pieces.

Physical is still in a strong uptrend. The pm stocks are oversold and look due for a short term bounce, per today’s action. There still remains a good possibility of further intermediate downside action.

I will post many charts this weekend, but none for now. Personally, I have not done anything, as I sold all of the positions I wanted to a few weeks ago as I thought this might be coming. My interest is rising, but I choose to wait until the dust settles and the tea leaves are a bit more discernible.

Try not to trade on emotion, especially panic or fear. Charts looks most bullish just before they turn bearish; and most bearish just before they turn bullish.

Good luck. Good trading. Good health, and that’s a wrap.

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Douglas V. Gnazzo
Honest Money Gold & Silver Report

About the author: Douglas V. 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 for the Advancement 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 © 2008 All Rights Reserved

-- Posted Tuesday, 12 August 2008 | Digg This Article