Wednesday, May 06, 2009

The Gold Price is Creeping and the Silver Price is Leaping Up

Gold Price Close Today : 910.50
Change: 6.80 or 0.8%

Silver Price Close Today : 13.692
Change: 29 cents or 2.2%

Gold Silver Ratio: 66.50
Change: -0.932 or -1.4%

Dow Industrial: 8,466.88
Change: 56.23 or 0.7%

US Dollar Index: 83.87
Change: -0.29 or -0.3%

The riddle continues as silver keeps on rising while the premium on US 90% silver coin keeps on falling. Maybe some big dealer trying to liquidate a big position in 90% coin?

STOCKS today rose 56.23 points to take the Dow to 8,467. The S&P500 climbed 9.76 to 913.55. This is painful to watch for anyone who understands that the primary trend is down, and this can only be at best a bear market rally. Look to sell any remaining stocks at 9000, if it gets that high.

The US DOLLAR INDEX swooned again today 28.6 basis points to 83.871. Why? Oh, I could peck around with reasons pulled from the news of the day, but the real truth is that the US dollar is trash, and the whole world knows it, and knows that Bernanke and his co-conspirators have ruined the buck with inflation, although as yet prices haven't blown the whistle. Just wait, they will. Sell all assets that promise to pay you dollars in the future, since dollars tomorrow will be worth less than dollars today. Sell insurance, annuities, CDs, bonds, bank accounts, anything that promises to pay dollars in the future.

I'm beginning to suspect that the wide market is not noticing how gold is creeping (and silver leaping) up. Gold rose another 6.80 today and closed at 910.50. Silver jumped another 29 cents to 13.692. Is anybody watching?

The SILVER PRICE stands above both its 200 Day Moving Average (DMA, now 12.60) and its 50 DMA (13.08). More important, it has clearly broken through the descending downtrend line.

Tomorrow silver needs to consolidate its gains by closing over 14.00 (13.80 minimum), then speedily moving above 14.60. Once above that barrier, silver will set its eyes on $21.00.

The GOLD PRICE also stands above its 200 DMA (856.79) but not quite above its 50 DMA (911.18 against today's close at 910.50). It must lose above 918.50, then speedily gain ground. Ultimately gold must pass 967, the March intraday high, to set up for another attack on $1,000.00.

Meanwhile the GOLD/SILVER RATIO has broken down (which we want!) through support at 67, the best news we've seen in a long time.

Where are we? Silver and gold prices must confirm a rally by BOTH closing above 13.80 and 918.50. Only when BOTH have closed above those marks can we talk about a rally, although it appears we are looking at one being born right now.

Next, both metals ought to leap out of the gate and speedily gain ground after that confirming close. Meanwhile, the ratio ought to steadil drop.

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.