Friday, May 22, 2009

This Week Silver and Gold Prices Staged Dazzling Breakouts

Gold Price Close Today : 958.50
Gold Price Close May 15th: 930.90
Change: 27.60 or 3.0%

Silver Price Close Today : 14.683
Silver Price Close May 15th: 13.99
Change: 69.30 cents or 5.0%

Gold Silver Ratio: 65.28
Gold Silver Ratio Close May 15th: 66.54
Change: -1.26 or -1.9%

Dow Industrial: 8,277.32
Dow Close May 15th: 8,268.64
Change: 8.680 or 0.1%

US Dollar Index: 80.041
US Dollar Index 15th of May: 82.916
Change: -2.875 or -3.5%

After all the niggling and hemming and hawing is done, fact remains that this week silver and gold prices staged dazzling breakouts, while the US dollar index broke down bleeding.

Monday the US DOLLAR INDEX was at 82.916 today it closed at 80.041, down nearly three hundred basis points, a huge move. Today it traded much of the day below 80, as low as 79.805. No doubt here that the Dollar Index is hastening toward 78, or lower, but 78 at a minimum.

Nor has the US Dollar Index hurt gold or silver. The gold price rose US$27.60 this week to close the week at US$958.50. This means more than the simple numbers. 928-930 was strong resistance, and above that was more resistance at 938-941.5. The gold price has steadily conquered those barriers and climbed nearly to its March correction high at 965.

What can await the gold price but another attack on US$1,000? As I oft repeat, the more times a market attacks a support or resistance level, the greater the odds it will break through. This rally isn't synchronized to the average seasonal pattern, but don't fight the market. It's happening. Little question that the disintegrating dollar is helping gold, but in the past couple of days demand has returned to the market, retail demand.

The SILVER PRICE rose 5% this week, 69.3 cents, to crown the week at 14.683. This beats the February 14.58 high, and puts the silver price into new high ground. Next goal and next resistance is 16.00.

Note carefully how the GOLD/SILVER RATIO has fallen. This is precisely what needs to accompany a rally in silver and gold. Next stop 54.50.

Note also that the Dow in Gold Dollars has fallen out of its trading range to G$178.52 (8.636 ounces), so the downtrend has probably resumed in stocks against gold.

STOCKS continue to wallow in the Slough of Despond, unable to climb above 8,600. They are also running out of time. Give them another two weeks, and if the Dow hasn't climbed over 9,000, get rid of the rest of your stocks (assuming you still have any, since I've been hollering for y'all to sell them since 2001).

NEXT WEEK gold and silver prices ought to improve their gains. The gold price should take no more than three days -- Okay, add one day for a correction -- to reach $1,000, where the Nice Government Men will probably wake up and try to hammer it. It's just a hunch, but I think this time the gold price will finally pierce US$1,000. Once it does, you'll never see it under $1,000 again. I am buying this breakout in both gold and silver.

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.