Friday, January 16, 2009

Today Silver and Gold Prices Put in the Second Half of the Key Reversal, Closing Higher -- Much Higher

Gold Price Close Today : $839.30
Change: 32.60 or 4.0%

Silver Price Close Today : $11.195
Change: 77.5 cents or 7.4%

Gold Silver Ratio: 74.97
Change: -2.447 or -3.2%

Dow Industrial: 8,281.22
Change: 68.73 or 0.8%

US Dollar Index Today: 83.89

Good week for silver and gold prices, not so good for stocks and the US Dollar.

SILVER and GOLD PRICES completed the second half of their key reversal today. Once again, the key reversal began yesterday not with the Comex close, but in the aftermarket: a break into new low ground with a higher close. Today Silver and Gold Prices put in the second half of the key reversal, closing higher -- much higher, in fact. Both silver and gold dropped until they touched their 50 day moving averages, a common correction, and then they bounced. Apparently a lot of buyers were waiting to see that price. Silver has drawn out a big, rounding bottom, very reliable bottoming formation.

Both silver and gold prices will move higher next week. Silver needs to best $11.50 - $11.80, then $13.80. The gold price must fight through US$857, but the greater target is US880. Better buy silver and gold now.

News today was all upbeat. California is delaying paying tax overpayment refunds because it's out of money. Circuit City is bankrupt and selling out. Citicorp is splitting up, and as a reward for its complete incompetence, the Fed announced it would guarantee $278 billion of its sorry assets. Bank of America got $20 billion from the government, and guarantees for another $118 billion. Merril Lynch, which BoA gobbled down, announced it has lost $39.1 billion in the last six quarters. As Hi said in Raising Arizona, "Over here you've got favoritism, and then there's who you know." That explains why the Fed & Treasury are pounding so many billions down these rat holes.

Stocks closed up 68.73 points today. Not an inspiring performance, but glancing at the chart for the last 3 days, the Dow has traced out a reverse head and shoulders. As weak as its response has been, I have to count that a reversal to the upside. Next week should see stocks rallying. I'm still looking for a 4 - 6 month rally, which will hand you your very last chance to get out of stocks. Take it.

US DOLLAR INDEX reached its 50 day moving average (84.86) this week and promptly collapsed. That probably marks the end of the dollar's rally. For my money, look for a lower dollar this month.

And for your entertainment today, here are some pronouncements of the experts about the last Great Depression.

On 25 October 1929, from Goodbody & Co.'s market letter to customers: "We feel that fundamentally Wall Street is sound, & that for people who can afford to pay for them outright, good stocks are cheap at these prices."

And in December 1929 the US Dept. of Labor, in it New Year's forecast, said, "1930 will be a splendid employment year."

And from the Harvard Economic Society on 20 September 1930, "Recovery will soon be evident."

Now y'all remember those statements next time you hear Bail-out Ben Bernanke and the next Secretary of the Treasury & Wall St. gurus shooting their blarney cannons at you. There's one sure fire thing that gives them away when they are lying: their lips are moving.

And, thinking about the inauguration next week, we note that on this day in 1547 Ivan the Terrible was crowned as the first of Russia's tsars.

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.