Monday, December 15, 2008

Once The Gold Price is Through $850 It Will Run, Run, Run

Gold Price Close Today : $835.40
Change: $16.50 or 2.0%

Silver Price Close Today : $10.589
Change: 39 cents or 3.8%

Gold Silver Ratio: 78.89
Change: -1.399 or -1.7%

Dow Industrials: 8,564.53
Change: -65.15 or -0.8%

US Dollar Index Today: 82.09
Change: -1.53 or -1.8%

The GOLD PRICE today rose $16.50, but its $835.40 close is still $14.60 shy of the magic number, $850 (25 year resistance). Be patient, it is pushing toward that barrier. Once through that it will run, run, run. For the first time since 24 October, gold's 17 day moving average has risen above the 50 DMA, a good sign confirming upward momentum.

The SILVER PRICE blasted ahead of the gold price, rising 39 cents to $10.589. That $10.50 point is silver's first hurdle. 17 DMA is about to cross above the 50 DMA. In the Gold/Silver Ratio, the ratio at 78.98 stands below its 17 DMA and not much above its 50 DMA (78.18). All these show momentum moving in the right direction, that is, up for silver and gold prices and down for the Gold/Silver ratio.

Has anybody noticed the Gold/Platinum spread? The Platinum price at $836.00 has fallen below the gold price, and historically that has been a no-lose time to swap gold for platinum, except that there's no platinum out there to swap for.

Today we learned once again how many real friends the US DOLLAR has, as we watched the US DOLLAR INDEX slide 153 basis points. That also points out that the liquidity squeeze for dollars has ended, at least for the nonce. Unsettled as things are, that squeeze could break out again at any time.

Here's something odd. Y'all know how Bust-up Ben Bernanke and Hank the Honker Paulson have been moaning and groaning about interbank credit drying up? Mmmmm . . . Then wonder how bank loans actually grew in the 3rd quarter? May be Ben and Hank are thinking only about their buddies in the big INSOLVENT banks. But wait! O perish the thought! Wouldn't that imply some small malfeasance, since they would be propagandizing and bullying congress in favour of their friends? And isn't that called -- now what's that name? Crony capitalism? Corruption? Or even the "F" word -- favouritism?

Something y'all ought to keep in mind about panics and crashes: scandals always erupt. As long as the bubble keeps blowing up, the scandals can be hidden, sort of like a Ponzi scheme, but when the bubble bursts, the scandals surface. And sometimes it's the emergence of a scandal that pricks the bubble. Every one of y'all out to buy a copy of Manias, Panics, and Crashes by Charles P. Kindleberger. It dissects the form of panics and crashes into its parts, and is one of the most entertaining books you'll ever read.

With that in mind, we are interested to note that former NASDAQ head Bernard Madoff was running a hedge fund that turned out to be a $50 billion Ponzi scheme. Wow. Sure builds your confidence in the Securities and Exchange Commission, huh? And government oversight in general. Iss inefficient American Soviet system, comrades!

STOCKS today failed to benefit from the plunging dollar, and dropped 65.15 points to land at Dow 8,564.53. Dow needs to get to 9,000, even 9,300 before it will attract buyers. Stay away from stocks.

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.