Wednesday, July 01, 2009

Gold Price Appears to Have Bottomed Unless it Closes Below 928

Gold Price Close Today : 941.00
Change: 13.90 or 1.5%

Silver Price Close Today : 13.740
Change: 16.6 cents or 1.2%

Gold Silver Ratio: 68.49
Change: 0.186 or 0.3%

Dow Industrial: 8,504.06
Change: 57.06 or 0.7%

US Dollar Index: 79.65
Change: -0.52 or -0.6%

Whoa! This volatile back and forth with the US Dollar and gold and silver prices is wearing me out. Before I delve into short term events, though, lift up your eyes unto the horizon. From 31 December 2008 through yesterday, 30 June 2009, the Dow was down 8.6%, the S&P500 up 1.8%, and oil rose 58%. Gold rose 5% and silver rose 20.4%, while the US Dollar index lost 3%.

The US DOLLAR INDEX was battered again, falling 51.5 basis points today to land at 79.646. Downtrend is in effect, and a close above 81.50 is necessary to change that outlook.

STOCKS are paralyzed, with the Dow up today a massive 57 points to 8,504. S&P500 rose 4 to 923.33. Nearer the Dow gets to 8,600, the scarer it gets. Stocks are a lost cause.

SILVER and GOLD PRICES completely confused me today. Instead of following through on the downside, both rose strongly. The gold price led with a $13.90 rise to US$941.00, very strong but not quite clean through the resistance area. The silver price rose 16.6 cents to 13.74. Without contrary evidence, gold appears to have bottomed. Unless the gold price closes below 928, that has to be the operating theory. Yet the silver price needs to confirm this move by climbing above 14.06, then 14.50.

At this point, there is no way I would be short silver or gold. In fact, I am still buying. The stormiest cloud on the horizon is the G-8 meeting in Italy July 8 - 10. No telling what trick that bunch of crooks will pull to drive down silver and gold prices and bail out the banks. Be forearmed for anything, knowing that whatever trick they pull, it cannot for long suppress the metals.

I heard that Bernie Madoff got 150 years in the slammer! Preposterous. As my friend Al Thomas asked, what about the really evil frauds who run Social Security, the biggest Ponzi scheme of all time? How come they're not in jail?

And on the radio this morning I heard that California is verging on bankruptcy, and is going to have to start handing out IOUs to welfare recipients. Hmmm. Let me see if I understand. California gives money to people on welfare because they don't have any money, but now California doesn't have any money, either, so they're going to give people on welfare IOUs? What good is that going to do? Somebody help me before I hurt myself laughing.

Today is Canada Day. Congratulations, Canadians.

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.