Thursday, November 20, 2008

Silver and Gold Prices Stand on the Verge of Breaking Out of their Downtrends

Gold Price Close Today : 748.60
Change: 12.7 or 1.7%

Silver Price Close Today : 9.025
Change: -28.5 cents or -3.1%

Gold Silver Ratio: 82.95
Change: 3.903 or 4.9%

Dow Industrials: 7,552.45
Change: -444.83 or -5.6%

US Dollar Index Today: 88.17
Change: 0.42 or 0.5%

No sooner had the words escaped my keyboard than the Dow Jones Industrial average proved yet again that triple bottoms are very, very rare. Breaking 8,000 yesterday broke stock investors' morale, & try as they might throughout the day to keep a stiff upper pocketbook, shortly after 14:00 somebody yelled, "Every man for himself!" When the dust cleared the Dow had dropped 444.83. S&P500 fell even more, down 54.14. Final scoreboard read Dow 7,552.45 & S&P500, 752.44. That Dow figure is probably within 500 - 700 points of the low, which, after today's debacle, ought to occur within the next few days.

The Dow in Gold Dollars (DiG$) made a new low for the move today, G$208.55 (9.943 oz), versus the 9 October low at G$200.82 (9.715 oz). DiG$ is telling us that gold will outperform stocks for some time to come.

The mysterious floating US DOLLAR INDEX rose today 42 basis points to 88.165, reaching, meseemeth, for another lower high in a series. Possible here is a spike top to 90 before it finally dries up and drops back toward its intrinsic value, namely, zero.

Either some confusion exists in the precious metals markets, or the Nice Government Men busied themselves today selling silver futures in their attempt to drive down the gold price. The gold price closed up 12.70 at 748.60 while the silver price closed down 28.5 at $9.025 (at 4:30 CST they were 747.70 & 9.06). Either that is a bad omen, where the silver price will pull down the gold price, or it is a market making up its mind.

Both silver and gold prices stand on the verge of breaking out of their downtrends, so if you were NGM strategizing, it was a critical place to sell silver to make the whole precious metals group look weak.
Platinum and palladium, too, both sold off badly today and yesterday, but that is easily explained by the American automakers' troubles, because auto catalysts consume a huge part of both metals.

GOLD/SILVER RATIO continues trending down but needs to break below 76:1.

I believe we've seen the lows in gold and silver. Seasonally they are setting up for huge rallies into next spring, falling wedges on both charts. Keep on buying both silver and gold.

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.