Wednesday, January 21, 2009

The Gold Price is Fighting its Way Thru US$850 - $857 Resistance

Gold Price Close Today : $849.60
Change: -5.0 or -0.6%

Silver Price Close Today : $11.315
Change: 15.7 cents or 1.4%

Gold Silver Ratio: 75.09
Change: -1.505 or -2.0%

Dow Industrial: 8,228.10
Change: 279.01 or 3.5%

US Dollar Index Today: 85.37
Change: -0.98 or -1.1%

Silver and gold prices had another forked tongue day, with the gold price falling US$5 to US$849.60 and the silver price rising 15.7 cents to $11.315 an ounce. I don't know about y'all, but that gold price, at 40 cents under the critical $850 resistance, looks as pure, innocent, truthful, and sober as a wino with Ripple on his breath. Appears more doubtful yet when the aftermarket rises 4-5 bucks.

Boils down to this: the gold price is fighting its way thru US$850 - $857 resistance, and it's a hard fight. Lots of sellers don't believe gold can -- or don't want gold to -- break out toward US$1,000. Be patient, be patient, we have time and a bull market and the Fed and the US Treasury on our side. Can gold break down further? Sure, it could -- could drop $200 and still be in a bull market, but more likely is gold over US$900 by month's end.

Silver is fighting a resistance battle, too. Fight here is to pierce $11.50 - $11.80, with resistance from $11.25 to $11.35 along the way. Whenever a market slows down, there's a danger it will fall further back. I think on that, but remain persuaded that we saw silver's (and gold's) bottom back in November at $880. I keep on buying. Yes, it makes me nervous that silver has not yet surmounted $11.80, but every bull market climbs a wall of worry. Silver's no different here and now.

Well, if yesterday saw the feel-good Obama rally, today saw the hangover Obama fall. The US Dollar Index gained 82 basis points yesterday, and fell 98 basis points today. Friends, this is not a currency market, this is a crap-shoot. What in the world could make a currency whiplash like that? Something we're not seeing, or has every market now been systemically infected with panic and emotion driven trading? Now who knows where we are with the buck? Yesterday appears to have been an overshoot based on the inauguration, today the reaction. But what tomorrow?

Long term we all know the dollar will drop, thanks to the gigantic dose of inflation already infused, but what in the short term? Never mind, for in the long term fundamentals will rule.

Dow lost 332 yesterday, gained back 279 today, up 3.5%, while S&P500 rose 4.3%. Once again, we are replacing "markets" with "crap tables." Odd, indeed, that good old silver and gold, which all the croakers and stock salesmen want to point to as "too volatile," appear steady as Carey Nation in a saloon, compared to other markets.

By the way, latest balloon has developed in the US treasury paper market, driving yields down near zero. This ain't the Great Depression, nor is it Japan 1990 - 2000. The lemmings will find themselves falling over this cliff, just like the real estate and tech stock boom cliffs before.

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.