Wednesday, June 17, 2009

If the Gold Price Low Was Not on Monday it is Close to a Bottom

Gold Price Close Today : 935.40
Change: 3.80 or 0.4%

Silver Price Close Today : 14.269
Change: 14.9 cents or 1.1%

Gold Silver Ratio: 65.55
Change: -0.423 or -0.6%

Dow Industrial: 8,497.18
Change: -7.49 or -0.1%

US Dollar Index: 80.26
Change: -0.48 or -0.6%

Somebody raided gold on the opening, driving it down to to $928.14 suddenly. Whoops! It was utterly without effect. The GOLD PRICE climbed steadily all day to close up $3.80 by the Comex close (12:30 CDT at US$935.40). At 1700, my time, gold is trading at $939.20. In other words, gold gained steadily throughout the day. Now it has reached resistance at $940. Tomorrow it will surely test that, but probably won't pierce it on the first try. If not, the bounce off $940 will tell us how hard and long the rest of this correction will be. As long as the gold price doesn't close below $926.80, the correction will be short and shallow. If it closes below $920, 'twill take a little longer.

In the last three days' trading the SILVER PRICE appears to have made a rounding double bottom at $14.06. As I observed yesterday, silver will at least trade up to $14.60 to fill that $14.40 - $14.60 gap its fall left on the chart.

At Comex close silver settled at $14.29, up 14.90 cents. At the end of my day, it's trading up another 12.1 cents at $14.39. So with silver we are watching $14.60 and $14.06. Long as it remains above 14.06, we'll keep assuming silver has bottomed.

Y'all don't forget what I said about this time of year. The seasonality charts for both silver and gold prices expect lows around this time of the year. So whether we saw lows on Monday, or whether they fall a little more, in time at least we are close to bottoms.

STOCKS today fell only slightly and traded in a fairly narrow range, closing down 7.49 on the Dow at 8,497.18. S&P dropped 1.26 to 910.71. If stocks do not hold on here, their next stop is 8,200.

US DOLLAR INDEX dropped a huge 48.2 basis points to 80.262. As usual, the dollar is wearing out friends, but its enemies never tire.

I want to get one thing straight in y'all's heads. The single most important principle in investing is always invest with, and never against, the primary trend. By primary trend I mean the 15 to 20 year general up ("bull market") or down ("bear market") trend. Never buck the primary trend -- never. That rule means you must not buy stocks or dollar denominated investments, because stocks and dollars are locked in bear trends that will continue at least until 2015.

If y'all never remember another word I write, never forget this: the trend is your friend. You will NEVER beat the trend.

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.