Friday, January 30, 2009

The Gold Price Will Shortly Break US$1,000

Gold Price Close Today : $927.30
Gold Price Close 23rd Jan: $895.30
Change: 32 or 3.6%

Silver Price Close Today : $12.56
Silver Price Close 23rd Jan: $11.932
Change: 62.8 cents or 5.3%

Gold Silver Ratio: 73.83
Gold Silver Ratio 23rd Jan: 75.03
Change: -1.20 or -1.6%

Dow Industrial: 8,000.86
Dow 23rd Jan: 8,077.56
Change: -76.700 or -0.9%

US Dollar Index Today: 85.946
US Dollar Index 23rd Jan: 85.472
Change: 0.474 or 0.6%

Last Friday I said I as expecting gold to challenge $920 this week, but I wasn't really expecting it to burst through, as it did today. As I muse and ponder silver and gold strength, what stands out is the US Dollar Index. It rose this week, yes, rose, but that didn't bother silver or gold a bit. The gold price rose US$32 (3.6%) and the silver price rose 62.8 cents (5.3%). Whenever I see silver and gold unintimidated by a rising dollar, I know some wiry strength lies under the market. If the dollar intends to rally to 88, it sure is keeping its friends in the dark. Two outcomes are likely from here: it rallies to 88, where it fails, or, it fails after closing below its 50 DMA, about 84. Either way, guess what? It fails. Get out of dollars, and all investments that promise to pay you dollars in the future.

STOCKS are just so sick they can't rise up off their bed of pain. The Dow in Gold Dollars, my measurement of the Dow by gold, dropped G$8.15 this week (0.394 oz) to a new low of G$178.36 (8.628). Odd here is that it has traded into a "falling wedge" formation, which usually resolves by breaking out to the upside. Here, the DiG$ is trying to break out downside. If it follows thru lower on Monday, the ultra-reliable DiG$ is telling us that gold is about to wildly outperform stocks, and stocks are going to sink much lower. If we ever see stocks rally, sell all you got.

"Tawdry" isn't a word I get to use very often, but it flew to mind when I looked at the Dow right at closing. It lay there gasping for air, 15 points beneath 8000, was below 8000 at closing, but the settlement -- O miracle of miracles -- came in at 8,000.86. Tawdry.

As I suspected last week, the gold price did a "touchback" toward the breakout point, but never got lower than $875. Then yesterday the gold price staged the first half of a key reversal, and scored the second half today with a higher -- much higher -- close. Beware -- plenty of resistance lies between here and $950, so next week will be tough. Doubt not that the "yaller metal" has caught the attention of the Nice Government Men trying to manipulate the dollar, the economy, and your future, and they're likely to mount an attack whenever they view gold as overextended and vulnerable.

I just don't know -- whether the gold price will breach $940 and run on through US$1,000 on this first try, or whether it will need a couple of tries. I do know that the gold price will shortly break that US$1,000, I just don't know how quickly.

Look at silver's chart, It has traced out a saucer or rounding bottom. The rim stands around $13.50. It may bounce trying to break through that rim, but break through it will.

The Experts Speak. (I love doing this.) "This is the time to buy stocks. This is the time to recall the words of the late JP Morgan that any man who is bearish on the United States will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years." R.W. McNeel, dir. Of McNeel Financial Service, 30 October 1929.

And how about this one, pure, 100% high grade Blarney:

"I see nothing in the present situation that is either menacing or warrants pessimism. . . I have every confidence there will be a revival of activity in the spring, and that during this coming year the country will make steady progress." -- Andrew W. Mellon, US Secretary of the Treasury, 31 December 1929.

Remember, there's only one way to tell when government officials are lying: there lips are moving.

Y'all have a great weekend.

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.