Tuesday, February 03, 2009

Tomorrow the Gold Price Will Gain - Smashing That 920-940 Barrier

Gold Price Close Today : $892.00
Change: -14.70 or -1.6%

Silver Price Close Today : $12.295
Change: -15 cents or -1.2%

Gold Silver Ratio: 72.55
Change: -0.307 or -0.4%

Dow Industrial: 8,078.36
Change: 141.53 or 1.8%

US Dollar Index Today: 84.88
Change: -1.27 or -1.5%

Y'all smell fish? Really ripe fish? Six, maybe eight days old? Yeah, right in the middle of the gold market.

Mayhap I can explain. Gold closed yesterday at US$906.70. Opened today at 900.94, made a high at 912.70, then plummeted to 888.60, and closed at 892, down 14.70. So far so good, until you look at the aftermarket, where it's trading at 902.90, up over ten bucks.

Now, it just doesn't normally work that way. So two interpretations are possible. First, the Nice Government Men were concerned that gold might break through 920 - 940 and lift off toward US$1,200, thus announcing to the world that the US dollar is, to put it with political correctness, value - challenged. Hence, they trashed gold by selling futures when it was weak (trying to push through 930).

Second, the gold market is merely showing the volatility that currently infects every market. Today's recovery (looking like the first half of a key reversal) in the aftermarket demonstrates how much strength undergirds gold, ready to buy big lots whenever it dips. Either way, my guess is that tomorrow the gold price will gain. I think smashing that 920-940 barrier is all but a foregone conclusion.

The silver price keeps buttressing that conclusion by refusing to dip below 12.00. Today's low was 12.14, with a close at 12.295, down 15 cents. I can't see this as weak.

The Dollar Index dropped a massive 126 basis points today. Why? Who knows? It's a market on meth, or a market on downers. No sense. And the bad news just keeps on coming for stocks! Ford sales down 42%, Toyota down 32%, even Disney net income was down 32% last quarter. Mercy, if Mickey Mouse can't make money worming quarters out of kids, who on earth can? It's an economic catastrophe for sure. Stocks rallied 141.53 today for a Dow close at 8,078.36. Dow Theory folks are now quibbling among themselves whether last week's and this week's new lows in the Transports and Industrials constitute a new Dow sell signal, on top of the one last fall. Lo, a sign of the times, and not a good one. I hope y'all have already sold your stocks.

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.