Thursday, July 17, 2008

Gold and Silver to Make Two or Three Tries Before they Finally Thrust Through Old Highs

Gold Price Close Today : 970.00
Gold Price Close July 11: 959.50
Change: -15.90 or -1.6%

Silver Price Close Today : 18.667
Silver Price Close July 11: 18.745
Change: -7.80 cents or -0.4%

US Dollar Index Today: 72.04
US Dollar Index July 11: 71.891
Change: 0.328 or 0.5%

Tomorrow our office will be closed. We will re-open on Monday, 21 July. That's why I'm sending the weekly commentary a day early.

US business media are such a bunch of worthless hogwash spouters! In the aftermarket today gold dropped 14 bucks and silver 18 cents. Some wire service reports said that gold was dropping because oil had dropped sharply ($5) and US economic outlook had improved. Improved? From catatonic to catastrophic? What has changed since last week?

Has Bush or Bernanke found a wagon-load of pixie dust on an alien spaceship? Did Paulson propose backing the dollar with silver and gold? Did US banks suddenly become solvent? Hogwash! People who write and print lies like these ought to be whipped soundly in public and then left to stew in a leaky dungeon for a couple of weeks, down where they throw the old bacon rinds and food scraps.

The best explanation for most market moves is simply "The fullness of time." That may not satisfy your curiosity,but it is always the truth at least.

This week silver and gold prices were knocking on the ceiling of old highs. It is to be expected, and it is usual, for markets to make two or three tries before they finally thrust through old highs. Gold's aftermarket fall today just took it to last week's close. I wrote yesterday that the most likely floor on this downmove was US$950 for gold and $18.50 for silver. Silver's low today was $18.34 and it's now trading at $18.48. Gold's low was $953.60 and it's now trading about $955.75.

More than anything else platinum's quick fall this week (without palladium following) worries me. A correction in the vastly over-bought commodities might, no, would cause trouble for silver and gold, temporarily only. Keep reminding yourself that silver and gold are in primary uptrends, bull markets, with another 8-10 years to run.

Here's an intriguing statistic. The ETF for gold, GLD, added 7.8% to its ounces from end-May to end-June. From end-June through 16 July, it added 8.97% to its ounces. GLD has to buy gold when it sells shares in its trust, and it has bought 1.86 million ounces recently. That’s US$1.77 billion worth.

Stocks rose today 176.85 to 11,416.13 (Dow). Means nothing. Small rally was already in the cards. It shows up. Nothing long term changes. US Dollar index rose 18 basis points today. Also means nothing, except that it managed to hold on above 72.

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 $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.