Friday, September 05, 2008

Is this a Double Bottom in Gold and Silver Prices?

Gold Price Close Today : $797.60
Gold Price Close August 29th: $829.30
Change: -31.70 or -3.8%

Silver Price Close Today : $12.24
Silver Price Close August 29th: $13.60
Change: -$1.36 cents or -10.0%

US Dollar Index Today: 79.040
US Dollar Index August 29th: 77.400
Change: 1.640 or 2.1%

I brought my wife Susan home today after a 8 days in the hospital for [heart] mitral valve replacement. I've had all the hospital & cardiac surgery fun I can stand for a while. Her surgeon worked masterfully, the other physicians added skill and wisdom, and the nurses are angelic beings from another realm far above Earth. I spent all but one night of the last 8 in her room, and I'm almost as tired as she is. By the grace of God she is doing remarkably well, thanks in no small part to your faithful prayers. Thank you very much. God does abundantly, exceedingly above all we can ask or imagine.

Today I am trying to bring myself up to speed, and I find that two weeks ago today I wrote y'all that 3 outcomes were possible, namely, a drop to a new low, a V-bottom, or a touchback. As things have developed this week and today, a double bottom (touchback) has unveiled itself.

The SILVER PRICE closed today at $12.248, a new low close but about the same as the 15 August $12.31 intraday low. The GOLD PRICE closed today at $797.60 ($792.15 low) against 15 August's close at $786. Together that paints a slightly lower silver price low close with a slightly higher gold low close. (Remember, double bottoms can be lower-higher, same point, and higher-lower.) More volatile silver wobbles & waves more than gold, so a lower close here works, although it certainly isn't ideal.

Next week will tell the tale, and my guess (okay, my bias, because I know silver and gold prices remain in a long term bull market) is that we are today witnessing the second prong of a double bottom. How will you know I am wrong? Lower closes in both metals on Monday.

Meanwhile the glorious US DOLLAR INDEX, Hero of State Capitalism, has risen all the way to where it stood last September. W - O - W. The RSI & MACD indicators are also the most eye-poppingly oversold I've seen them in a long, long, long time. If I saw anything else that overbought, I would have to say, "Gravity the Avenger is about to hit you in the head with a 48 oz. ball peen hammer."

STOCKS now wallow more than 20% down from their October all-time high. Many analysts use that 20% mark as the measure of a bear market. On the other hand, we ignorant hillbillies from Tennessee don't measure the Dow in always-dwindling dollars, which is like trying to shoot skeet off the back of a bass boat in a storm. Rather, we don't know no better than to measure the Dow in gold or in silver, and against those monetary metals stocks have lost seventy-per cent of their peak values. Stocks are in real trouble. Sell them all, and put the proceeds into silver & gold.

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.