Friday, June 26, 2009

The Gold Price is About to Move Higher, and Drag the Silver Price with it

Gold Price Close Today : 940.70
Gold Price Close 19th of June: 935.6
Change: 5.10 or 0.5%

Silver Price Close Today : 14.128
Silver Price Close 19th of June: 14.189
Change: -6.10 cents or -0.4%

Gold Silver Ratio: 66.58
Gold Silver Ratio 19th of June: 65.94
Change: 0.65 or 1.0%

Dow Industrial: 8,438.39
Dow Industrial 19th of June: 8,536.03
Change: -97.640 or -1.1%

US Dollar Index: 79.83
US Dollar Index 19th of June: 80.268
Change: -0.440 or -0.5%

The chart above brightly illustrates why you ought to check WEEKLY charts as well as daily. Think about all the back-and-forth, the tug-and-pull, the blowing and puffing this week -- for what? After all is said and done, the gold price stands five bucks higher, the silver price has fallen a silly six cents, the dollar has fizzled, and stocks have fallen 100 points. In other words, nothing much happened, or else it turned out dead contrary to what you expected during the week.

Since the dollar hit that high on 15 June at 81.085,it has established a firm DOWN trend. Today the dollar ended up at 79.828, down 44 more basis points. If it falls below 79.60 on Monday, then the sharks will smell the blood in the water and the dollar will drop another 100, maybe 150 basis points. Also, I hope the last two weeks' trading has demonstrated to y'all that the idea that gold is tied to the dollar is hogwash. Gold's moves have not been proportional to the dollars, and some days they move the same direction. The Dollar is one driver of gold, but not the only one.

After a rough week when it appeared the gold price would extend its correction down to US$900, it stopped at US$918 and rose to close the week at US$940.70 (Comex), up $5.10 from the week before! Expect an attack on the gold price on Monday, but if the gold price can hold on to US$930 next week, then the low is behind us.

The SILVER PRICE, as always more volatile than the GOLD PRICE, took a greater wound from this week's attack. It closed up today 12.3 cents on the day, but still ended the week down 6.1 cents at $14.12.(Yesterday's commentary had the wrong price, by the way. The silver price closed at $14.00 cents, not $14.05 cents.) Right now, silver is following gold, and y'all shouldn't expect that to change any time soon. At stake here for the Nice Government Men is keeping the gold price away from US$1,000. However, gold is tugging at the leash so hard it might reach US$1,000 before the fall, unseasonal as that might be.

On the other hand, gold's strength might evaporate on Monday and we'd be left with a summer correction to fill out, and lower prices. Right now, my instincts tell me the gold price is about to move higher, and drag the silver price with it.

STOCKS dropped today 34.01 to end at 8,438.39 (S&P500 fell 1.36 to 918.90). With all the nutty projects and changes coming out of Washington, how do they expect stocks ever to rise? Stocks hate uncertainty. Meanwhile, the government is changing all the rules, day by day. Worse, all these changes place permanent drags on the economy, new costs and charges that will continue to pull it underwater long after the current crop of goofs has left DC. If I had planned to de-industrialize the US and gut its economy, I couldn't have done a better job than the US government has done since 1945. Makes you wonder whose side they are on. Anyhow, stocks will fall again next week, and probably will hit 7,800 before this particular downtrend ends.

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.