Monday, June 15, 2009

Average Seasonal Gold Price Low Takes Place on June 13

Gold Price Close Today : 926.90
Change: -13.20 or -1.4%

Silver Price Close Today : 14.020
Change: -84.5 cents or -5.7%

Gold Silver Ratio: 66.11
Change: 2.870 or 4.5%

Dow Industrial: 8,612.13
Change: -187.13 or -2.1%

US Dollar Index: 81.09
Change: 0.87 or 1.1%

Tornado spawning storms are headed my way, so I'll have to make this fast.

US Dollar index rose sharply today, up 87 basis points to 81.085. That wouldn't make much difference to silver and gold were they rallying, but they're correcting, so it hurts. Top on US dollar index is 82, but perhaps as high as 200 day moving average at 83.58.

Rising dollar recently (for reasons mysterious) hurts stocks as much as metals. (Maybe not so mysterious, though -- at least stocks represent something, whereas a US Dollar is simply an I-O-U-nothing.) Dow dropped 187.13 today (2.1%) to 8,612.13. S&P 500 fell even harder, down 22.49 to 923.72. Nice Government Men better hope that US Dollar doesn't rally too long, or the "Myth of Recovery" whirling around a "rising" stock market will vanish with the mist.

The GOLD PRICE took a hard lick today, down 13.20 to close on Comex at 926.90. Trading in the current market at 928. This is the support area that should have stopped it -- so far so good. The SILVER PRICE showed its superior volatility on the downside today with an 84.5 cent fall to 14.02 cents.

When endeth the pain? Not long. Often these waterfalls are over in 10 - 11 days, or have at least hit their lows. Still, let's look at the downside possibilities.

WAIT! Wait! Did I forget to tell y'all something I discovered today? Working on seasonality of metals, I found that for the last 10 years, the average (not actual) seasonal low for silver and gold prices takes place on June 13. Since that's an average, it might move several weeks either way in any given year, but the point is clear: we are near a bottom in time (seasonality).

Percentage wise silver will, as usual, fall further than gold. Silver could stop here at 14.00, or drop to 13.80-13.50, or 13.00. My guess is for less correction rather than more, so I am watching 14.00 and 13.80 closely. The gold price might stop here around 928-930, where we spent a week when we were rising, but might also stop at 920, 900, or 890. Right now, US$900 is the lowest I see, but the market speaks every day and I can but listen.

Don't let this drop in silver and gold prices bother you. Remember, both are in a long term primary uptrend (bull market) and the trend is your friend. Best bull market strategy is to buy, hold, and buy more.

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.