Friday, December 19, 2008

The Silver Price Will Rise 4.83 Times as Far as Gold Price

Gold Price Close Today : $836.40
Gold Price Close 12 December: $818.90
Change: 17.50 or 2.1%

Silver Price Close Today : $10.819
Silver Price Close 12 December: $10.199
Change: 62.00 cents or 6.1%

Gold Silver Ratio: 77.31
Gold Silver Ratio December 12: 80.29
Change: -2.98 or -3.7

Dow Industrials: 8,579.11
Dow Industrials December 12: 8,629.68
Change: -50.570 or -0.6%

US Dollar Index Today: 81.300
US Dollar Index December 12: 83.619
Change: -2.319 or -2.8%

In spite of the metals' drop from Wednesday's highs, look at those gains posted this week!

The US DOLLAR INDEX and the Fed were the major actors in this week's events. The Fed announced (translated from Fed-speak) that they were lowering the Fed Funds rate to a 0.0% to 0.25% target, and that they were going to fire up the money-creating machine, and hire three shifts to man it. As the dollar market had been declining for 6 days expecting catastrophic news, the announcement took the pressure off the dollar, and it began a reaction rally. After dropping 150 - 180 basis points a day, it began rallying 100+ bps a day, jumping from 78.603 on Wednesday to 81.30 today. This is no longer a foreign exchange market, it's a casino.

But never mind these short term events, don't miss the big point: the dollar is dead. After shoving some $8 trillion in new credit into the monetary system -- "inflation" -- Bust-up Ben won't be able to suck all that out of the system. Within 6 - 12 months the inflation will start showing up in price increases. Those with eyes to see -- the "realisers" -- already see the bar-fight coming and are edging toward the exits by buying silver and gold. Next year will see gigantic rises in both metals. Get out of dollars while you can.

Stocks were confused today, with the Dow and a few other indices down while most rose. Stay out of stocks. Keep on looking for that rally next year which will offer you your last chance to sell stocks.

The GOLD PRICE, having hit the top of its trading channel and its 200 day moving average on Wednesday, predictably bounced off the channel and fell back some. If we have not already witnessed the downward limit of gold's reaction, it might reach $820. Use any declines as an opportunity to buy more.

The SILVER PRICE, ever more volatile, hit $11.3890 on Wednesday, but then fell back to close at $10.8190 today. As long as it remains above $10.50 cents, silver is just taking deep breaths before it runs for $14.00. Yes, yes, yes, I know that croakers and doomsayers are all croaking and doomsaying about silver being an "industrial metal" and therefore not rising like gold. These are many of the same people who have fought the silver bull market all the way up, so why should you listen to them now?

Unless you understand this one principle, you understand nought about precious metals' bull markets: monetary demand, and monetary demand alone, drives both gold AND silver. It's not Indian wedding demand or the popularity of silver jewelry that drives their prices, but sheer monetary demand, holding them as "money" because the alternatives -- national currencies -- are clearly failing.

WHEREFORE, before this bull market ends, you will need only 16 ounces of silver to buy one ounce of gold, which means from here that the silver price will rise 4.83 times as far as the gold price. Forget the siren song of the "gold-only" bugs, who have fallen for the myths of the money interest: both silver and gold are money, and always will be.

From 24 December through 2 January our office will be closed to celebrate the Twelve Days of Christmas, and to perform certain needful renovations. You can e-mail us during that time, but we won't be manning the telephones.

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.