Wednesday, February 11, 2009

Look For Silver and Gold Prices to Climb More, But Beware a Correction

Gold Price Close Today : $943.80
Change: 30.10 or 3.3%

Silver Price Close Today : 13.515
Change: 39 cents or 3.0%

Gold Silver Ratio: 69.83
Change: 0.218 or 0.3%

Dow Industrial: 7,939.53
Change: 50.65 or 0.6%

US Dollar Index Today: 85.80
Change: 0.22 or 0.3%

Breaking through that clot of resistance at 920 - 930, the GOLD PRICE burst ahead US$30.10 to close at US$943.80. Only 8 days in July did the gold price close higher than today. Close to beat is $977.70 of 15 July 2008. At 30 bucks a day, the gold price will reach that, uhh, tomorrow. Either we are seeing a wild breakout here, or a short term top. How will we know? The gold price won't close over 977.70. Once it does, it will never look back.

The SILVER PRICE reached its 200 day moving average today, which might be a good place to stop, or it might be a place to leap ahead. Even if the silver price is making an intermediate top here, I'll bet there's another 50 cents in it, to $14.00 anyway.

GOLD/SILVER RATIO should drop at least to the 200 DMA at 66:1. A drop through that level would start a waterfall.

Look for silver and gold prices to climb more, but beware a correction. Platinum has climbed above US$1,000 again, and Krugerrands and American Eagles now cost more than $1000 at retail. Whew!

Y'all know that the Fed and the government have only two weapons: inflation and blarney. Having nearly melted down the barrel of the inflation cannon lately, yesterday they charged up the blarney cannon, and fired off a colossal blast. By that I mean, new Treasury Secretary Geithner (why does his name remind me of the Nazi Party official, Gauleiter?) gave a speech about how the government and Fed will save us all, curing even athlete's foot and bad breath.

I'm not going to ridicule Gauleiter Geithner's entire speech in detail, tempting as that may be. Rather, I will focus on the (har-de-har-har) "Financial Stability Trust", which will buy up the rotten assets from the banks and hope to find some way, some day, to work out of them. This is merely a re-tread of the Resolution Trust Corporation used during the Savings and Loan crisis to shuck the banks' losses off on the taxpayers. Geithner assures us that this will need only $500 billion, but assuming the same more than 10 to 1 expansion of the RTC, let us go out on a limb and guess that this thing will grow to a minimum $5 trillion. Boom! Boom! Boom! Thus speaketh the blarney cannon (but it never hurt anybody,except those who believe it.) As my friend Catherine Austin Fitts observes, "These are not serious people."

The markets hath spoken, and they had no lofty opinion of the Obailout. Stocks recovered barely today, Dow up 65, but they remain suspended over the volcanic caldera by a fingernail.

The US DOLLAR INDEX rose today 22 basis points to 85.80, but that changeth nothing. Remains in a downtrend.

Two more lambs arrived this morning. We have two other LaMancha milch goats who look like they've been eating watermelons. They should kid at any time.

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.