Wednesday, April 29, 2009

Gold and Silver Prices Need to Rise Above 920 and 13.25 to Confirm an Upside Breakout - Otherwise, Buy the Dips -- Every One

Gold Price Close Today : 899.80
Change: 7.00 or 0.8%

Silver Price Close Today : 12.754
Change: 35.4 cents or 2.9%

Gold Silver Ratio: 70.55
Change: -1.450 or -2.0%

Dow Industrial: 7175,63
Change: 168.78 or 2.11%

US Dollar Index: 84.57
Change: -0.63 or -0.7%

The GOLD PRICE has rallied from US$867.40 twelve days ago to US$899.40 today. Only fly in the ointment is that gold also climbed as high as 920 but never followed through. And today the gold price closed pennies below 900, a psychological thump (thanks a lot, Nice Government Men!).

All this works out to what I was expecting when I left for New Mexico: a trading range correction where you ought to buy the dips. Unless gold closes below 889 tomorrow, buy it now. Big support lies at 860. A close below that would take gold down to 820 or 800, but the longer gold goes without that break, the lower the chance of that. Now, having survived and prospered the last couple of weeks, gold, I think, has weathered the storm. Worst is past.

In the last 12 days the SILVER PRICE has vastly outperformed the gold price, 8.2% to 3.7%. This underscores why I keep on urging y'all to buy more silver than gold. The silver price drops further in corrections, but rises faster in rallies, than the gold price. Silver now stands about its 200 day moving average (12.35) but below its 50 DMA (13.03), which coincides with resistance at 13.05. Today the silver price rose 35.4 cents to 12.754.

Gold and silver prices need to rise above 920 and 13.25 to confirm an upside breakout. Otherwise, buy the dips -- every one.

It's been 12 days since I published a commentary because I was traveling with my wife and five of my 11 grandsons in New Mexico. Yet basically, nothing much has happened in the markets. Oh, except that silver has risen 8.2%, gold 3.7%, the Dow is unchanged, and the US Dollar Index has failed in another rally.

The US DOLLAR INDEX fell again today, breaking its uptrend line and promising much lower prices below 83. It closed today at 84.567, down 0.626, a meaty move down. For years I've been begging y'all to shuck all dollar investments -- bank CDs, annuities, insurance policies, bonds, savings & checking accounts -- and put the proceeds into silver and gold. Keep your eyes on the long term and get out of dollars and into silver and gold.

STOCKS have languished over the past 12 days, churning back & forth between 7800 and 8200, burning up gas driving in circles. Worse yet, it's gas they couldn't afford to burn. Begins to make me suspect the rally will not reach as far as I have been expecting. Today's close at 8,186 might lead to a breakout tomorrow, but it must come tomorrow or else unfold as merely one more disappointment. I repeat my long held warning that stocks are headed below 6,000 Dow, and will lose even more value against silver & gold than against the dollar. Swap stocks for silver and gold.

New Mexico is a beautiful state. We saw Santa Fe, Taos, Abiquiu, Ghost Ranch, & Los Alamos. But wow! There's a lot of sand, too. New Mexico was great, but home is always better. Like every woman, every place has its own peculiar beauty. No place smells like Tennessee in the spring. Wild azaleas are blooming, & soon the honeysuckle will come on, but it's not the flowers that I love best. It's the damp smell of the secret places of the woods.

I'll send y'all a commentary tomorrow, but then I have to go to South Carolina for a wedding. I'll be back to work on 4 May.

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

- Franklin Sanders, The Moneychanger

© 2009, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

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.