Thursday, June 04, 2009

Good Chance Silver and Gold Prices Will Correct For a While

Gold Price Close Today : 981.20
Change: 16.70 or 1.7%

Silver Price Close Today : 15.883
Change: 58.3 cents or 3.8%

Gold Silver Ratio: 61.78
Change: -1.262 or -2.0

Dow Industrial: 8,726.32
Change: 51.04 or 0.6%

US Dollar Index: 79.34
Change: -0.15 or -0.2%

When Comex closed today at 12:30 Central Daylight time, the gold price had regained 16.70 of its 18.70 loss yesterday to close at 981.20. The silver price took back 58.3cents of its 64.5 cent lost, and ended at 15.883. At 5:00 p.m. they're trading at US$979.8 & 1592 c. It's very unusual for any market to come back that way after a very sharp drop. What does that mean?

Looking at other indicators, RSI and MACD, gold and silver could have reached their max and the US Dollar Index could have reached its low. But then, today's near-total recoveries speak against that. If I had to say (and I don't but I will), I'd say there's a good chance silver and gold prices will correct for a while, and the US Dollar will rally. This can't last long, as the dollar today, after yesterday's near-100 basis point rise, lost 15 basis points. That, and the metals' rise, leaves the impression that the market doesn't really buy the idea of US Dollar strength.

Here's how you'll know that interpretation is wrong: the gold price will close above 984 and the silver price above 16. If you see those together, then Watch out! Silver and gold prices are headed for the moon.

Don't mistake my words. Gold and silver price correction should be short and shallow, not lower than 941.50 and 14.80 (if that low) and for a week or so at most. Expect dollar rally to be patchy, weak, unconvincing.

Once again, use any price weakness in silver and gold to buy more, OR buy any breakout over 984 and 16.

Stocks, stocks -- does anybody watch stocks any more? They rose a bit today. Dow settled up 51 points at 8,726 & S&P rose 8.52 to 940.28. Nothing much happening there. Rally is nearly exhausted, but expect at least one more pop higher.

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.