We're Almost There

Gold closed on Friday at $783.90, another 27-year high. Gold is therefore only $16.10 below $800, which has been my upside target for this year. The gold chart below suggests we may soon exceed that price.

Silver also did well this past week, and it actually outperformed gold, rising 4.9% on the week compared to gold's 2.6% advance. Nevertheless, silver remains within its pennant consolidation pattern formed since last year.

We can see in the above charts the divergence between silver and gold that I highlighted in the last alert. Gold has broken above its May 2006 high, but silver is still below last year's high. Silver needs to break above $14.85 to confirm that both precious metals have resumed their major uptrends. As I noted in the last alert, this non-confirmation is not a reason for worry, but it does represent something we should be watching carefully.

Meanwhile, the US Dollar Index closed the week at another record low.

The trends are clear. The precious metals are trending higher, while the dollar is heading lower. I see no reason why these trends are about to reverse course.

Short-term corrections can of course occur at any time, but don't let those distract you. Go with the major trend. Own the precious metals and avoid the dollar.

Published by GoldMoney
Copyright © 2007. All rights reserved.
Edited by James Turk, alert@goldmoney.com

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