Wednesday, November 12, 2008

The Gold Price Now Stands Right at its Last Two Lows - This isn't Good, as it has the Smell of Breaking Down Further

Gold Price Close Today : 717.70
Change: -$14.30 or -2.0%

Silver Price Close Today : 9.480
Change: 32.5 cents or -3.3%

Gold Silver Ratio: 75.71
Change: 1.051 or 1.4%

Dow Industrials: 8,282.66
Change: -411.30 or -4.7%

US Dollar Index Today: 87.61
Change: 0.37 or 0.4%

SILVER and GOLD PRICES dropped today on the close, then dropped more in the aftermarket. The gold price closed down 14.30 to 717.70 while silver dropped 32.5 cents to close at $9.48. In the aftermarket as I write gold is trading at 709.90 and silver at 930. Gold/Silver ratio stands at 76.33.

(An encouraging footnote to this is the performance of the Dow in Gold Dollars (DiG$) and the Dow in Silver Ounces. Both are trending downward, and stand not much below the last lows, so swapping stocks for silver and gold has proven a better bargain than holding stocks.)

The gold price now stands right at its last two lows. This isn't good, as it has the smell of breaking down further. Silver stands higher above its previous low, but today its trading wasn't precisely inspiring. Hold on and watch to see how this will resolve.

Logic has fled the scene and events randomly pile on each other without apparent connection or cause. Comrade Treasury Commissar Paulson informed congress today that having spent about $300 billion of the dough from the bailout bill, he was changing his mind and spending the rest on something else instead of "troubled" assets (a.k.a. mortgage backed securities).

For the first time in history, the Fed, FDIC, Comptroller of Currency, and Office of Thrift Supervision issued a joint statement that warned banks they had better spend, or else. Oh, it was dressed up in muddy bureaucratese, but the message was clearly, "Lend, or we will twist your tail until you do lend!"

And in the face of these Mafia antics from government, the US dollar rose 37 basis points.

Logic, where art thou? Reason, where hidest thou thyself? Common sense, art thou drowned in the deeps? Events have become "a tale told by an idiot, full of sound and fury, signifying nothing."

Stocks keep on falling and falling. Today the Dow dropped 411.30 to 8,282.66 while the S&P fell 40.84 to 858.11. November hasn't ended yet, and neither has this crash leg in the stock market. Could drop to 7,250 Dow, even lower before a reaction rally begins.

Now hear what John Kenneth Galbraith once said, "I'm sure a crash like 1929 will happen again. The only thing is that one doesn’t know when. All it takes for another collapse is for the memories of the last insanity to dull."

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.