Tuesday, October 21, 2008

Silver Price Strength Hints that the Gold Price May be Ready to Turn Around

Gold Price Close Today : 766.10
Change: -21.50 or -2.7%

Silver Price Close Today : 10.050
Change: 38.5 cents or 4.0%

US Dollar Index Today: 84.27
Change: 1.20 or 1.4%

Sorry I missed y'all yesterday, but I woke up with a stomach virus that canceled all my plans and my consciousness for 24 hours. Amazing how certain we are about the plans we lay, and what a vanishingly small thing (a micro-organism) can demolish all those plans. What's the lesson? We are not in charge.

Biggest news I saw today was the rise in the US DOLLAR INDEX by 120 basis points to 84.27. My take on that? Dollar has corrected slightly and is beginning to rise again, but not for long. Expect the dollar to run out of gas between 85 and 87.5 a most.

Looking at the Dow and how it faints every time it tries to raise its head, I am glad I am not the Nice Government Man "tasked" with manipulating the stock market. What a rotten job. Get out of stocks, get out of US dollars and investments that promise to pay dollars in the future.

Today the silver price rose 38.5 cents to 10.05 while the gold price fell 21.50 to 766.10. At least, that's what happened in the paper market. In the physical market the silver price (as measured by US 90% silver coin) rose from 14.385 yesterday to 14.888 today. Or, as measured by one ounce silver rounds, the silver price rose from $11.99 yesterday to $12.49 today.

The paper gold price today fell $21.50 to $766.10. The physical gold price dropped from $850.25 (basis Krugerrands at wholesale) to $831.60 (basis Krugerrands). Right, that's 65 bucks above the paper gold price.

Frankly, it's tough even to guess what's going on. The gold price may drop to its previous low, say, $740, but who knows? The strong fall today in the Gold/Silver ratio, from 81.7 on Monday to 75.7 today, showed great silver strength, and hints (I said "hints") that gold may be ready to turn around as well. Intriguing, isn't it, that on the day when the dollar index rises 120 basis points, gold takes a $21.60 hit while the silver price rises? Add that to the long list of "Things That Don't Make Sense" in these mysterious markets.

Ninety-eight years ago today, on 21 October 1910 my father was born, into a world little changed since the 12th century, but Oh, how the 20th century changed everything. Thing I remember most about my father is that he was always ready to laugh, & he knew everybody in the world. If we went out to eat at some restaurant in a city we'd never visited before, I can promise you he'd find somebody there he knew. R.i.p.

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.