Monday, November 10, 2008

Gold Price Must Cross $750 and The Silver Price Must Cross $10.50 Before They Can Make any Headway

Gold Price Close Today : 745.60
Gold Price Close October 31: 716.80
Change: $28.80 or 4%

Silver Price Close Today : 10.22
Silver Price Close October 31: 9.73
Change: 49 cents or 5%

Gold Silver Ratio: 72.95
Gold Silver Ratio October 31: 73.67
Change: -0.71 or -1.0%

Dow Industrials: 8,870.54
Dow October 31: 9,337.75
Change: -467.21 or -5.0%

US Dollar Index Today: 85.979
US Dollar Index October 31: 85.647
Change: 0.332 or 0.4%

I've been away traveling since 30 October, but you can see from the above table that stocks have continued to shed points, the US dollar index is flat, while silver and gold prices have risen 5% and 4%.

Realistically you ought to be factoring in a rise in the US dollar index. How much it will rise (thanks to the goosing of the Nice Government Men) I can't say, but I still expect to see 87.5 or 88 out of it before it fails. How long can this continue? Another couple of months, I suspect, but keeping the dollar up is like trying to levitate an anvil. It won't last too long, although as long as it remains high it will slow down silver & gold like a headwind. Be patient, get out of US dollars.

Stocks are not going to improve for any length of time before they make another plunge downward, and then they'll spend the next 10 years trying recover. As I've been advising since 2001, get out of stocks.

SILVER and GOLD PRICES have troubles of their own. The gold price has put in what appears to be a double bottom around $713, which is fine progress. But what about moving up now? Gold's line in the sand is US$750. It must cross that line first before it can make any headway.

SILVER's comparable line in the sand is $10.50. Until the silver price crosses that line, the market will remain sceptical. Unlike gold, silver has not made a double bottom, which gives my brain (if not my heart) pause. Will it make another bottom to balance that single one at 880 cents? It might, but the double top in the Gold/Silver Ratio slightly above 84 suggests that silver has already done all the bottoming that it intends to. Real progress would be marked if the ratio closed below the recent low at 70.94.

Long term the outlook hasn't altered one little bit. The Fed and the US government have pumped so much credit and money into the system that a stunning inflation (if not outright hyperinflation) most surely will hit. Brace yourself for it.

Biggest bogey on the horizon is the meeting of heads of state and finance ministers on 15 November in Washington for a "new Bretton Woods." Considering that Bretton Woods directly de-industrialized the US by placing its manufacturers at a permanent exchange rate disadvantage, one strains to wonder what sort of evils might be spawned by a second Bretton Woods. One strains, and one laments one's lack of imagination.

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

- Franklin Sanders, The Moneychanger

"Buy Silver and Gold Coins at:"

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.