Thursday, July 09, 2009

Silver and Gold Prices May be Struggling Here in July, but by September They Will be Rallying Again

Gold Price Close Today : 915.90
Change: 6.90 or 0.8%

Silver Price Close Today : 12.924
Change: 8.3 cents or 0.6%

Gold Silver Ratio: 70.87
Change: 0.079 or 0.1%

Dow Industrial: 8,174.71
Change: -3.40 or 0.0%

US Dollar Index: 79.85
Change: -0.78 or -1.0%

Vermont and New Hampshire are breathtaking. My son and I returned late last night from three day's hunting cows. Well, not hunting with a gun, but searching for a Scotch Highland bull to replace our Pilgram who died. And find one we did, and four handsome heifers besides. Father of this little bull had a rack of horns seven feet wide. I wish I could send y'all a picture.

In my absence the US dollar index rises for three days, gets a whiff of 81, and collapses. The dollar is trapped between 79.40 and 81. The chart looks like a broadening top, which always breaks down, although it nags you to death waiting for it. Today the dollar index dropped at huge 78 basis points to close at 79.852.

Stocks are confused today, with most indices barely rising and the Dow barely falling 3.4 to 8,174.71. S&P500 closed up 2.42 at 881.98. Given the downtrend, stocks should reach 7,800 in two weeks.

The silver price, on no particular cause except the fullness of time, hit my $13.00 target and sank a bit beneath it. Yesterday's close was 12.8410, and that might mark the low close for this correction. If not we are looking at the 200 DMA and $12.23.

Add to this muddle of messages the premium on US 90% silver coin, which at wholesale has risen from 25 cents an ounce under spot on 1 July to 15 cents over spot today. That's a large move, and I've come to expect the 90% coin premium to rise -- stubbornly -- when a silver bottom has been hit. Sellers just disappear while buyers clamour for more, and that premium must rise. Sign that a bottom is near.

The gold price hit support at 906 yesterday. If 906-900 fails, then expect a quick fall toward 865, the last low. However, as strong as gold is, it might stop at the 200 DMA (877.11) or anywhere along the way, including support at 889.

I look at the chart and other indicators, and begin to think this correction may last longer than I had originally thought. On the other hand, Tuesday's low could be a double bottom with the low on 23 June (intraday low as 913.20).

Think long term, long term. Silver and gold prices may be struggling here in July, but by September they will be rallying again. Don't miss a single opportunity to buy more silver and gold on every decline. Meanwhile, the market will soon tell us the outcome of this short term trend, either by closing below 900 or rising above 930.

On this day in 1991 after a 4-1/2 month trial and 18 month pre-trial and four year investigation, the jury in our federal trial for conspiracy and wilful failure to file income tax returns came back with a NOT GUILTY verdict for all 16 defendants. Because I had opened a gold and silver bank, the IRS and Federal Government claimed that I was engaged in a conspiracy to delay or defeat the IRS. It was merely one more example of the US government's war on silver and gold money, as the enforcer of the banks' monopoly. Not one of us had done anything wrong, or illegal.

Psalm 27 says, "Though an host of men were laid against me, yet shall not my heart be afraid; and though there rose up war against me, yet will I put my trust in [the Lord]." The almighty federal government came down on us to gobble us up, wives and husbands. They spent 4 years investigation, maybe $20 million, and another $2 million on a trial. They had all the guns and all the money and endless lies. In our defense, we had only the Lord God on our side. Let those who think his arm cannot save behold, and cover their mouths with their hands. The Lord lives, and covers himself with glory, and never fails those who call on him.

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.