Thursday, June 25, 2009

If the Gold Price Closes Above 940 the Bottom for this Correction is Behind Us

Gold Price Close Today : 939.10
Change: 5.00 or 0.5%

Silver Price Close Today : 14.00
Change: 9.5 cents or 0.7%

Gold Silver Ratio: 66.84
Change: -0.094 or -0.1%

Dow Industrial: 8,472.40
Change: 172.54 or 2.1%

US Dollar Index: 80.l35
Change: -0.18

Heavens! The daily charts for silver and gold prices just look too strong for a continuing correction. After making a double bottom at 918 on Monday, the gold price tried Wednesday and Thursday to bull its way through 940 without success. If it closes above 940 then the bottom for this correction is behind us. If not, bottom probably still in, but the gold price must drop back down to last bottom to prove it.

The Silver Price daily chart looks just like gold's a flat-topped rising triangle. In a sane world that would mean it's about to break out to the upside, but we are not dealing with a sane world. For the silver price, 14.06 is the barrier. A close above that says silver's bottom is in, a close below that means silver must work a while longer on the downside.

Today the silver price on Comex closed up 9.5 cents at 14.005 cents while gold closed at US$939.10, up 5.00. I know it sounds crazy after this week's drop, but both silver and gold prices look poised to rise.

The US Dollar index dropped another 18.3 basis points today to stop at 80.354. It can't even push through 81. If the dollar index closes below 79.60, it will fall at least 200 basis points.

STOCKS have probably finished their downward move for a few days. Tuesday and Wednesday appear to have put in a little double bottom at about 8,260. After the big fall stocks are due for a little countertrend bounce.

I'm so far out of the mainstream I ought to be called the slipstream or the limpid pool or maybe rain puddle. I listen to economists on NPR (I know -- why would anybody do that? The crime is its own punishment) and they must be living in a parallel universe. At least, what they all see is invisible to me. I'll tell y'all what. If the elusive "bottom of this recession" actually happens this summer as they are predicting, then I'll make a promise: I have a large-brimmed straw hat I wear to mow. Next summer this time if the economy is just a-hummin' along, I'll go out in the yard in front of y'all and everybody and I will eat that straw hat. Shoot, I'll throw in a couple of big bugs, too.

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.