Wednesday, June 03, 2009

Buy Any Silver or Gold Price Dips

Gold Price Close Today : 964.50
Change: -18.70 or -1.9%

Silver Price Close Today : 15.300
Change: -64.5 cents or -4.4%

Gold Silver Ratio: 63.04
Change: 1.38 or 2.23

Dow Industrial: 8,675.24
Change: -65.63 or -0.8%

US Dollar Index: 79.46
Change: 0.97 or 1.2%

I know these sudden down-days are nerve-racking for y'all, but I've been doing this for 29 years and I am disgusted-ly accustomed to surprise parties from the Nice Government Men, may they all be bathed from head to toe in incurable athelete's foot and chiggers!

Hence yesterday, when silver and gold prices were blowing and going and headed much higher, I wrote: "I reckon the Nice Government men are growing restive about now, and might strike a blow at metals, but I don't think they'll do any more than annoy us."

Right on cue, they struck today. Tiny Tim Geithner, your itty-bitty Treasury Secretary, got the Chinese to announce that everything is just roses with them, holding zillions of declining US government treasury paper denominated in declining dollars, and they are just happy as a hog in slop to keep on having their pockets picked, thanks very much, US of A!

Silver and gold prices were up this morning, but when that announcement hit the market, the US Dollar (still the national currency, but probably not for long) rose nearly 100 basis points to 79.459 (moments ago).

Markets seem to dislike a strong dollar. Stocks dropped slightly -- Dow down 65.63 to 8,675 and S&P500 down 13 to 931.76 -- but silver and gold price both took socks to the jaw.

The Gold Price dropped 18.70 to US$964.50 at the Comex close.

The Silver Price fell 64.5 cents to 15.30 on Comex. As of 16:20 Central time, the gold price is trading at 964.20 and the silver price at 15.35.

Bad thing about pulling rabbits out of a hat is that sooner or later you run out of rabbits -- or sometimes the moths eat your hat. Tiny Tim needs to conjure up more magic tricks to get the rotten US Dollar above 82 again. What will it be next time, aliens from planet Zambodia wanting to buy US dollar debt? US government finds new oil field under Washington, DC? Whoops! I forgot, they have oil a-plenty there already: snake oil.

Silver and gold will need 2-3 days to digest this blow, but were so strong leading up to this that it's hard to imagine they will enter a long correction. The gold price needs to protect 965, 941.50 at least, and the silver price needs to protect 14.60 - 14.80. Remember also that the gold price was nearing big resistance at U$1,000, and the silver price was knocking through like resistance at 16.00, so a correction was likely without the NGM. Whether this will turn into a longer dollar rally and longer metals correction, we will see.

Buy any silver or gold price dips. Just buy.

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.