Friday, June 19, 2009

Correction in Silver and Gold Prices is Not Over Yet

Gold Price Close Today : 935.60
Gold Price Close June 12: 940.10
Change: -4.50 or -0.5%

Silver Price Close Today : 14.189
Silver Price Close June 12: 14.865
Change: -67.60 cents or -4.5%

Gold Silver Ratio: 65.64
Gold Silver Ratio June 12: 65.64
Change: 2.70 or 2.70

Dow Industrial: 8,536.03
Dow June 12: 8,799.26
Change: -263.230 or -3.0%

US Dollar Index: 80.268
US Dollar June 12: 80.197
Change: 0.071 or 0.1%

For a rallying market, the US DOLLAR INDEX didn't make much headway this week. Today it gave up a whole week's progress. Scoreboard stands up 7 basis points, about 0.1%. Dollar's rally has yet a ways to run. Fed appears to be draining liquidity, which helps the dollar, but with congress voting yesterday to spend another $106 billion on perpetual-war-for-perpetual-prosperity, that won't help the dollar long term. However, for several more weeks the dollar will be causing trouble for metals.

STOCKS could not thread their way through 8700, and so fell back this week. Probably they haven't seen the end of the valley yet on this move. Longer term, keep your eyes open for Dow 6,000.

The DOW IN GOLD DOLLARS fell this week, knocked flat again off of G$193 (9.336 oz). Stocks will keep on under-performing gold for another long time it seems.

I've been studying gold and silver seasonality this week. Did y'all know that in 5 out of the last 8 bull market years, gold has posted its yearly low by 15 May? About half the time gold's high falls in December. Silver makes its low (on average) on 13 June. Of course, all those are averages and offer therefore only general guidance. In other words, you might get creamed following that for a trading guide, but you might not.

SILVER and GOLD PRICES have held up well this week. Primarily I was concerned whether the gold price could hold the 928 - 930 resistance area, and it did. Traded all the way up to 940, but couldn't break through yet.

Today on Comex the silver price closed down 4 cents at 14.189. The gold price closed up 1.60 at US$935.6

The silver price has been weaker during this correction, but that's like saying "water is wet." The silver price is more volatile, so of course is weaker in a correction. Still, the silver price has defended 14.00, and that's heartening.

Correction in silver and gold prices is not over yet. Seasonality suggests it has only a couple more weeks to run. A gold close below $900 would probably fall quickly to 865, but that's an outside chance. Silver might trade to 13.00 or 13.50. That's why these 930 and 14.00 levels successfully defended this week are so important. If we can go another week with those intact, then the correction's worst beating is behind us.

Gold and silver price long term trends are UP. Use every instance of price weakness to 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.