Monday, January 05, 2009

Gold and Silver Prices Should Rally Well Into the Spring, Taking Gold Above $1,200 and Silver Near the $28 Mark

Gold Price Close Today : $857.20
Change: -21.60 or -2.5%

Silver Price Close Today : $11.245
Change: 22 cents

Gold Silver Ratio: 76.39

Dow Industrials: 8,952.89
Change: -81.80 or -0.9%

US Dollar Index Today: 82.66
Change: 1.17 or 1.4%

Except for my office still being torn up and trying to learn to work on Apple instead of PC computers, I'm glad to be back. I hope y'all enjoyed your Christmas.

Silver and gold prices worked their way higher during the week between Christmas and New Year, but remember that during that time most traders are away, so that trading sometimes is just a blip on the screen, meaning nothing. Gold closed out last week at US$878.80, and silver at 1146.5 cents. I held my breath. What would happen when the bandits returned to the market?

Early on, the short sellers drove silver down to $10.90, and gold to the ropes of US$850. Did they break?

Not for a minute. They began clawing their way up again. The gold price closed at $857.20, down 21.00, and the silver price at 11.24, down 22 cents. If you merely glance at those closes, you might mistakenly conclude that silver and gold had a tough down day. In truth, the black shirts on the floor played with the market last week. Today those phantom gains were lopped off, but more importantly, both silver and gold held above critical support ($11.00 and $850). Both bottomed back in November, ran up to the top of the trading channel, then traded sideways through Christmas.

Following the typical seasonal pattern, gold and silver prices should rally well into the spring, taking gold above $1,200 and silver near the $28.00 mark.

STOCKS are very slowly trying to pull up into a rally. Although the S&P500 has reached a respectable 927.45, the Dow just can't climb over that fence at 9,000. Expect stocks to rally into the spring, too, but after 4 - 6 months to swoon again. Use this rally to sell off any stocks you may yet hold. If ever there was a "last chance", this is it for stock investors. (Yes, I exempt from that recommendation precious metals stocks.)

The US DOLLAR INDEX at 82.66 today showed a big one day jump -- 116 basis points -- but is only about 100 basis points above its December 23 close. We are not impressed. The dollar is struggling and wallowing like an old scow in high seas. Eventually it will sink.

Before we go to sleep, y'all look at the GOLD/SILVER RATIO. It is driving toward the bottom of the range, and should shortly break through 70. A very big rally in silver and gold prices lie in front of us. Notice that as metals' prices climb, premiums are slipping. I bought a few Austrian 100 coronas and Mexican 50 pesos today at rates that translate into 4.5% retail premiums, best we've seen in a long time. Platinum American Eagles are once again available, but at a starchy 5.5% premium at wholesale.

I appreciate y'all's enthusiastic reaction to my Christmas Clearance Sale. All the lots disappeared quickly. Thanks very much.

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.