Monday, September 08, 2008

Bullish Non-Confirmation of Silver's New Low a Signal the end of this Decline Draweth Near

Gold Price Close Today : $797.60
Gold Price Close August 29th: $797.50
Change: -0.10 or -0.0%

Silver Price Close Today : $11.99
Silver Price Close August 29th: $12.24
Change: -25.5 cents or -2.1%

US Dollar Index Today: 79.39
US Dollar Index August 29th: 79.04
Change: 0.35 or 0.4%

I remember taking these beatings from the market in the past, especially in 2004 and 2006. It encourages me to remember that in the end, the primary uptrend (bull market) pulled out of those dark days, so this present eclipse will end soon, too.

The most harrowing face of this decline is silver's weakness, and particularly its weakness against gold. The gold silver ratio has risen to 66.5, undoing the work of more than two years. Since the silver's performance against gold so closely tracks the stock market, the message here bespeaks more pain for stocks than for silver. Silver will remain in a bull market even if it drops to ten bucks.

While the silver price dropped today 25.5 cents to $11.99 and a new low for the move, the gold price remained essentially unchanged, down one thin dime to $797.50. That is a bullish non-confirmation of silver's new low, and (I hope) a signal the end of this decline draweth near.

Now I know that conspiracy-theory is the last refuge of a scoundrel who can't find a more plausible explanation, but I do think it convenient that the US Dollar (The Leper-Buck) rallied about the same time that the Fed & the US Treasury needed to keep up the appearance that US financial world was not actually exploding in a monetary A-bomb. I know that if I were pencil-neck Ben Bernanke or Hank the Fixer Paulson I would certainly want that dollar rallying while I was picking the taxpayers' pockets for a $5 trillion dollar Fannie/Freddie bailout for my Wall Street masters.

Y'all ought to batten whatever hatches you have, because a tough time is coming -- soon -- for banks and stocks. This will not be a beautiful fall for Washington & Wall Street, regardless what the leaves do.

I know that my continual expectation of a bottom in these last weeks may cause some to sneer at me as a "silver perma-bull," but I'm not terribly concerned. The long term bull market remains in place, and every bull market is punctuated by periodic correction terrors. This is one, but it is not the end. Just hold on, hold on, and if you can find any silver, buy it. Wholesale premium on US 90% silver coin has risen to 85 cents, highest since 1999. In other words, people who hold silver won't sell at these prices. More proof of a bull market.

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.