Thursday, July 02, 2009

Gold Price Keeps Hitting the Wall at $945 and Skidding to a Stop About $925

Gold Price Close Today : 930.70
Gold Price Close 26th June: 940.70
Change: -10.00 or -1.1%

Silver Price Close Today : 13.394
Silver Price Close 26th June: 14.128
Change: -73.40 cents or -5.2%

Gold Silver Ratio: 69.49
Gold Silver Ratio 26th June: 66.58
Change: 2.90 or 4.4%

Dow Industrial: 8,280.74
Dow Industrial 26th June: 8,438.39
Change: -157.650 or -1.9%

US Dollar Index: 80.284
US Dollar Index 26th June: 79.828
Change: 0.456 or 0.6%

Remember that a long holiday weekend, such as the one we're facing, takes people out of the market. They close out positions before they leave for the weekend, and put those positions back on when they return on Monday. Anyway, next week is dangerous for currencies and metals, because of the Gang of 8 meeting in Italy.

Look at the 30 day gold price chart. The Gold Price keeps hitting the wall at $945 and skidding to a stop about $925. In other words, its range bound between $945 and $925. Sooner or later it will break out, one way or the other. Either way, it will make a quick, substantial move when it does break out, to $900 or to $1,000. Today it dropped $10.30 to close at US$930.70 on Comex.

The Silver Price must be somewhere near a bottom. The gold silver ratio has moved to a shocking 69.5. How much higher can it go? This looks like a good spot to swap gold for silver. Other indicators show the ratio is about to peak, although silver may drop further. Still, I'm guessing it won't drop below $13.00 - assuming gold doesn't drop below $900.

One other tiny item in silver's favour: the premium on US 90% silver coin is creeping up. That says holders are unwilling to part with their silver at these silver prices, usually a sign of a bottom, but not a terribly timely one always.

Gold and silver are in a long term bull market, so buy the dips, buy the dips!

OW! Stocks lost a whopping 223 Dow points to close at 8,280.74. S&P500 dropped 26.9 and wound up at 896.42. As I said yesterday, the Dow will see 8,200 before it sees 8,600. In fact, it may see 7,800 before it sees 8,600.

In spite of a 60 basis point rise today, the US DOLLAR INDEX remains in a downtrend. It must close above 80.50 to break out of that downtrend. Personally, I think it's time for another re-design of American currency. Besides, those old dead presidents don't swing any weight any more, so to re-align pictures on the dollar with current political realities, I think we ought to put pictures of people on the dollar who really run things. I suggest the new bills feature pictures of the past presidents of Goldman Sachs, and we print a new denomination, the $3 bill, with Little Timmy Geithner's picture.

We will be closed tomorrow for the Fourth of July holiday. Next week, 6 July -8 July, I will be traveling with my son to New Hampshire to search for a new Scotch Highland bull.

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.