Thursday, May 28, 2009

The Gold Price Rally is ON

Gold Price Close Today : 961.50
Change: 8.20 or 0.9%

Silver Price Close Today : 15.150
Change: 29.4 cents or 2.0%

Gold Silver Ratio: 63.47
Change: -0.704 or -1.1%

Dow Industrial: 8,368.92
Change: 68.90 or 0.8%

US Dollar Index: 80.51
Change: 0.17 or 0.2%

Today's gold and silver price action smashed the theories of those who believe silver and gold must move in lock step opposite to the US dollar. The US DOLLAR INDEX closed up 17.4 basis points at 80.506, but gold and silver blasted higher.

The gold price reached 964.98 at the high, and by Comex closing was at US$961.50, up 8.20 today and up 24.50 in the last week. The close above 958.3 takes gold above its March correction high and sets its sights on US$1,000. (Wring my neck! I've been looking at the wrong chart, & giving y'all the intraday high as the breakout point, rather than the close.)

The silver price hit a 15.27 high today. At Comex close it was 15.15, up 29.4 cents today and up 88 cents in the last week. Next target is 16.00.

I have to say, The Rally is ON. Gold has closed above its March correction low (off the February high) & silver has closed above its February high at 14.4880. It will hit 16.00 or higher before this rally ends.

ADD to that confirmation from the GOLD/SILVER RATIO, which has dropped nearly two huge points in the last two days, to close today at 63.47. Next stop? A jiggle at 62, then 57:1, maybe 53.5. A lot lower.

One reader asked why I would recommend buying the breakout. When a market trades in a range, you don't want to buy near the top of the range because it is likely to trade to the range top and then fall back. It is safer, then, to (1)wait to buy near the range bottom, or (2) buy the breakout above the range. Generally when a market breaks out of a trading range (up or down) it will make a large move.

But in a bull market (primary up trend), the most fundamental rule is to get long and stay long. The rising market will eventually cover up even your worst timing mistakes.

STOCKS are fiddling. The Dow closed up 68.9 today at 8,368.92. S&P 500 managed to climb above 900 to 903.52 (up 10.49). No direction and no enthusiasm. Sell 'em if you got 'em.

US DOLLAR INDEX might manage to rally to 82, where it fell off. Doesn't matter really, though, because the long term trend is down, down, down.

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.