FSU Editorial: "Silver Bullet" by Chris Waltzek 03/05/2006

SILVER BULLET
The Gold and Silver Review
by Chris Waltzek
SilverInvestor.blogspot
March 4, 2006

Gold finished on Friday near $565, up about $7. Silver closed near $10.18, up about $.48. Gold retreated slightly this week but managed to record another bullish candlestick in the weekly chart. The big store this week was in the silver market. Silver treaded water all week and then spiked higher on Thursday by almost 50 cents up to $10.25, the first move above 10 dollars and into double digits in over 22 years, as seen in the chart below:

Last weeks report suggested: "...silver showed surprising strength this week. The chart below shows a very bullish weekly candlestick for the metal. Silver appears capable of making another assault upon the recent market peak." Silver did climb to high levels and sliced through the powerful psychological $10 level as though it wasn't there at all. Speculation concerning the proposed silver ETF continued to encourage bullish traders about the precious metal. James Moore, an analyst at TheBullionDesk.com commented: "Conditions are set to remain volatile in silver for some time to come as traders await the SEC's decision on Barclay's ETF application... a positive outcome and subsequent launch is likely to generate plenty of upside with $12.50 remaining my price target.�

Gold lagged silver on a percentage basis but manage to close near record highs, up near $7 for the week. Last weeks report noted: "The (gold) market ended the week on a very bullish note, from a technical perspective higher prices next week are expected.) In the gold chart below, prices did indeed drift higher but were unable to break-out above the previous peaks high point:

The XAU, gold stock index consolidated to close near the break even point for the third consecutive week. In the weekly chart below, gold stocks posted another slightly bullish candlestick. The long lower wick is a very powerful technical indication of higher prices to follow next week. Note that it does not guarantee a higher close, only that higher prices are likely at some point:

All three of the major stock indices have been consolidating for nearly 3 months. The Dow Jones remained above support at the 11,000 level after testing it this week. It recorded a bullish weekly candlestick. However, the Nasdaq and the S&P attempted to close above resistance but were unable. For the Dow break-out to remain valid, we would like to see break-outs in the Nasdaq and the S&P next week.

Guru Predictions
*The Golden Guru Award*

There were far fewer Gold Guru's willing to share their forecasts for precious metal this week, however, two did stand out:

Ned W. Schmidt, of: THE VALUE VIEW GOLD REPORT, reiterated his price target for gold: "Dollar denominated investors, both of them, should be using all buying opportunities to add to their Gold positions. As shown in the last two charts on US$Gold and CN$Gold, those opportunities present themselves on a regular basis. US$1,300 Gold and CN$2,000 Gold are both no longer fantasies about which Gold Bugs write. They are real possibilities."

Dr. Clive Roffey noted: "The gold market has been drifting for the past few weeks as it consolidates its recent gains. After a brief flirt with the $535 support the gold price has rebounded back above the recent $555 resistance. Its Friday night push in the US above this $555 resistance has triggered the start of another bull trend and signals the end of the recent correction. This gold market has been in limbo for the past couple of weeks but the news of attacks on oil installations has provided a new set of fundamental data to determine the next main trend move. Irrespective of the short term vacillations my longer term target of $620 remains intact."

Swiss America CEO and author Craig R. Smith shared his gold price forecast: "Gold is on a trajectory to reach $600 an ounce or more this year based on market fundamentals and current geopolitical conditions. Even when the big funds and banks sell off gold on profit taking, the gap is quickly filled with strong demand from the growing global base of smaller investors. Gold anywhere under $600 is a bargain. Commodities trump stocks as long-term bet," Mr. Smith told WND's Joseph Farah in a recent interview available free on CD.

Bottom Line

The Gold Guru Award of The Week Award, goes to Ned W. Schmidt for his intrepid $1,300 gold price projection. When we take the average of our intermediate-term pundit estimates for gold we find a single price target of, $840 an increase of $2 from last weeks consensus of $838.

($1,300 + $620 + $600) / 2 = $840

Contact Information
Chris Waltzek
Lilburn, Georgia
Trend Traders | SilverInvestor Blogspot
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