Tuesday, January 08, 2008

Gold Prices Gapped Up, Which I Call a "Runaway Gap" Signaling Much Higher Gold Prices Coming Very, Very Quickly

Gold Price Close Today : 878.00
Change: 18.40 or 2.1%

Silver Price Close Today : 15.707
Change: 52.7 cents or 3.5%

US Dollar Index Today: 76.12
Change: -0.05 or -0.1%

The Gold Price breached $865 today, & stopped stuttering all of a sudden.

Upon any such extreme move up or down, every trader ought to ask himself,"Is that the blow-off that signals a turnaround?" So we ought to ask both stocks & gold today. Certainly, stocks had better turnaround here, or the Nice Government Men have a bona fide crash on their hands.

Can GOLD PRICES go higher? Why not? On the Forex chart today (but not on all the futures charts) gold prices gapped up, which I call a "runaway gap" signaling much higher gold prices coming very, very quickly. It's quite frightening, really, paired as it is with a stock market falling 960 in the last 9 trading days.

US DOLLAR frittered away 5 basis points today while the world was falling apart around it. The NGM have decided to throw you, me, and all the rest of the "cattle" on the fire & let the dollar collapse to bail out the massively in debt US economy.

Either run for cover, or become their victim. Me, I loathe them too much to co-operate, especially in my own destruction.

Now pardon me, while I parade before y'all some numbers I find fascinating. Can't imagine how I overlooked it, but the 1929 Dow top was G$381.17 (they were all gold dollars in those days). Heaven & earth are filled with more things than I understand, but I have observed that markets tend to trade back to old support. But 79 years, now that's old. Still, there was a support area about G$380 in these last months.

That so picqued my curiosity that I went back to check the 1929 Dow's activity, because today the Dow in Gold Dollars (DiG$) crossed a momentous milestone: it dropped below G$300 (14.513 oz. of gold to buy the entire Dow). What happened in 1929 when the Dow dropped thru G$300? The first day that happened was 24 October 1929, when it closed at G$299.47. Next day it closed up at G$301.22. But the next day the Dow traded, 28 October 1929, it closed at G$260.64.

Let me bring that number up to date. With gold at US$880/oz, the G$260.64 DiG$ equals a raw Dow of 11,095.44, a 1,494 point drop from today's close.

By 13 November 1929, 10 trading days later, the Dow closed at G$198.69, equal in 2007 to Dow 8,458.23, or 4,131 points lower than today's close.

Carefully note that I am not predicting these numbers, just comparing today's closes with 1929's, on the momentous occasion of the Dow closing below G$300 for the first time in its post-1999 bear market against gold.

Anyway you view it stocks were thrashed today. Dow down 238.34 to 12,589.15, lower than the August & November lows; S&P500 down 26 at 1,390.18, below the magic 1,400; Nasdaq Comp down 58.95 at 2,440.51, & the Nasdaq 100 down 47.11 to 1,910.33.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

"Buy Silver and Gold Coins at the Best Prices"

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.