Wednesday, January 14, 2009

This Ought to be the Last Leg Down of the Gold Price Correction

Gold Price Close Today : $808.20
Change: -11.90 or -1.5%

Silver Price Close Today : $10.452
Change: -20.3 cents or -1.9%

Gold Silver Ratio: 77.32
Change: 0.356 or 0.5%

Dow Industrial: 8,200.14
Change: -248.42 or -2.9%

US Dollar Index Today: 84.44
Change: 0.18 or 0.2%

Compared to the Dow, gold has no problem. This ought to be the last leg down of the gold price correction, backstopped by the 50 day moving average at $803.70 and round number $800. Possible gold could break to $780 on a spike, but only possible. Time is working on gold's side here. Longer it goes without breaking 800, less the chance it will.

Is it scary? No joke. Since July gold has drawn out a series of declining tops. To prove it isn't going to drop forever, it needs to close above $885, then $940. Scared or not, I'm going with the primary uptrend. Gold's bull market only began in 2001, and 8 years isn't long enough for a bull market, not by half. Besides, here we are ruminating about where gold will go in the next few days, while ignoring that it stands about 3-1/4 times above where it began.

Fascinating thing about "scary" is that it usually is accompanied by "paralyzed." Our minds may analyze the situation correctly, and know we ought to act (buy) when the price drops and we're scared, but hardly one person in a hundred does that.

The SILVER PRICE has done no more than drop down to its 50 DMA (now $10.29) and the uptrend line. I expect this $10.50 area (closed today at $10.45) is where silver will begin to fight much harder. Chance always exists silver might break and re-visit $9.00. Watch $10.25 - $10.50.

I may be crazy, but I am buying silver all the way down.

Sharp falls, sharp rallies. The US DOLLAR INDEX continues to rally, although I suspect it's rallying days are numbered. Mildly amusing to note that yields on US government debt have been driven near to zero by the "flight to safety." Can y'all imagine that? People -- smart people, people with money -- actually believe that running to the debt of the greatest welcher and counterfeiter in mankind's history, the US government, denominated in the most overvalued currency in the world, the US Dollar, is a "safe" place to hide! Hide from what? Uhh, well, all the financial chaos caused by the Great Counterfeiter and its rotten currency. If any of this makes sense to y'all, then let me know how.

Looking at the chart, what great things hath the Dollar Index wrought? It has climbed back up to its 50 day moving average. Not yet a runaway bull market. Oh, yes, it also filled a gap left when it fell so fast in December. Standard stuff.

Mercy me, I don't know about that Dow Jones Industrial Average! Close today at 8200 was about as low as it can go and remain breathing. If it spikes down to 7750, then 'twill have to rise right back up and rally strongly. I believe than stocks will rally into the spring, but on faith only, and just barely on the chart. Stinks. Y'all sell stocks whenever you get the chance, certainly at any price above Dow 10,000.

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.