Friday, March 06, 2009

This Week Saw Gold and Silver Prices Climb Out of Their Correction

Gold Price Close Today : $942.10
Gold Price Close 27th February: $941.50
Change: -0.60 or -0.1%

Silver Price Close Today : $13.323
Silver Price Close 27th February: $13.085
Change: 23.80 cents or 1.8%

Gold Silver Ratio: 70.71
Gold Silver Ratio Close 27th February: 71.95
Change: -1.24 or -1.7%

Dow Industrial: 6,624.94
Dow Close 27th February: 7,062.93
Change: -437.990 or -6.2%

US Dollar Index Today: 88.680
US Dollar Close 27th February: 88.097
Change: 0.583 or 0.7%

This week saw gold and silver prices climb out of their correction, saw stocks weak enough to make every stockbroker in the country puke in his wastebasket twice a day, and saw the dollar index running back and forth like a goose in a new world.

The GOLD PRICE roared back this week with a close over 927, bettered today to 942.10. More ominously for those still trying to buy, deliveries began to lengthen again this week, and premiums crept up on American Eagles. Buyers are starving, clamouring for gold. It appears set up for another test at US$1,000, but I'm not sure it will breach that wall on this try. May take one more.

The SILVER PRICE climbed above its 200 day moving average (now 13.24) and gained slightly on gold this week. Most of this year it has been leading gold and pulling at the leash. Big hurdle is the lip of the saucer rim at 13.50. A cross above that sends silver skyward. Close below 13.00 means silver has more work to do base-building.

Reason I'm holding back on silver and gold is that the correction seemed awfully steep and sudden, without the usual A-B-C pattern. That means that the present move might be a B-wave that fools everyone with its enthusiasm, then evaporates into another down leg. Even if that is true, gold would not drop below 920 or so and silver probably not below 12.80. My worry will be proved pointless when gold closes above US$1003.00

US DOLLAR INDEX made it as high as 89.16, but can't better the last high at 88 any further than that. Ned Schmidt speculated today that the only trades working for hedge funds were shorting stocks and going long dollars (shorting euro & yen). Maybe that accounts for dollar strength, maybe it's mobs fleeing to liquidity around the globe. Still, no matter what they do to raise the dollar, Obama & Co. are ahead of them in Washington, depreciating the dollar. Long term, the dollar will follow the same trajectory as an anvil dropped off the Empire State Building. Use any dollar strength to get out of any investment that promises to pay dollars in the future: CDs, bank deposits, annuities, bonds, even hedge your pension if you can.

STOCKS have the appearance of something in one of those horror movies where you fall down this black pit to the center of the earth. Surely sometime a rally will come, but when? Meanwhile if stocks don't rally, my targets are 6,250; 5,891; and 4,958. look for any rally to get out of any remaining stocks you hold.

As stocks are making new 12-year lows this week, they are also making new lows against gold and silver. Dow in Gold Dollars made a new low today, G$145.37 (7.032), on its way to the eventual 2 oz. or less. Dow in Silver made a new low at 495.88 oz.

Susan and I live about 12 minutes from our farm, and when we pulled up this morning we stopped to look at the sows in the field with our Large Black boar, Nefarious. Several of them look pregnant, but I didn't see the one that looked MOST pregnant. When a pig is about to farrow, her belly hangs low and her teats begin to fill with milk. We got back into Tojo (our old Isuzu trooper) and drove to the gate. There by the gate was the missing Large Black sow, with seven miniature piglets. She had made herself a big nest (yes, pigs nest) and farrowed last night. Large Blacks are a rare breed and wondrous pig, big, fast-growing, and gentle as a dog.

Y'all have a great weekend.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

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.