Tuesday, February 10, 2009

Gold Price Has a 70% Chance of Breaking Thru $980 On This Run

Gold Price Close Today : $913.70
Change: 21.30 or 2.4%

Silver Price Close Today : $13.125
Change: 30 cents or 2.3%

Gold Silver Ratio: 69.62
Change: 0.032 or 0.0%

Dow Industrial: 7,888.88
Change: -381.99 or -4.6%

US Dollar Index Today: 85.63
Change: 0.77 or 0.9%

Clearly, nobody in Washington can read history or follow a chart or scan markets. Today they passed the "we'll-all-die-of-starvation-and-poverty-without-it" bailout bill. The stock market dropped 381 points, which is pushing up toward one of the biggest drops we've seen in the last 12 months. And just to show you that Salvador Dali & the Surrealists are writing the script for the world today, the US DOLLAR index, which stands to lose most by the bailout rose 76 basis points. Were I an Washington Obama-apparatchik, I would spend tonight staring up at the ceiling, sweating bullets and blood. There's a monster loose out there, and he's threatening to gobble up the whole world.

But we misfits, we happy few who sold stocks and shunned mortgages while the enthusiasts were running wild, are humbly encouraged today (humbly, because we know that tomorrow markets may swing round and slit our throats) because gold rose 21.30 to 913.70, silver rose 30 cents to 13.135, and the gold/silver ratio dropped below 70:1 to close at 69.62. Gold is pounding on the doors of its September/October highs, while silver (as I expected) has met little or no resistance in its leap from 11.80 toward 14.00.

Only fly in the ointments is that the metals' RSIs and MACDs are beginning to look overbought, but they can get more overbought still. If gold clears this 920-940 area, then pierces $980, nothing will stop its reaching $1200. On the other hand, if gold fails here, it would suffer a 1 - 3 month correction. I'd say it has an 70% chance of breaking thru $980 on this run.

The DOW stands at the lower limit. Either it catches here at once or it will sink through the last 7,580 low and continue to 6,000. Nice Government Men have their jobs cut out for them tomorrow, re-floating the stock market.

By the way, this pattern in gold trading smells heavily of mackeral, especially in view of silver's strength. Gold gets slapped down $20 bucks, closes very low, then in the aftermarket pops right back up, and follows thru next day with more gains. There are very resilient buyers beneath this market, and a very large seller around 920-930. Guess who the seller is (wink! Wink!).

Here's one last thought: Platinum rose 41 bucks today, and palladium rose 3 bucks to close at 1,036.10 and 212.40 -- over 1,000 and 200. Folks are running for cover, and they're looking for a metal roof.

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.