Monday, July 27, 2009

The Silver Price Continues to Outperform the Gold Price

Gold Price Close Today : 953.50
Change: 0.50 or 0.1%

Silver Price Close Today : 13.985
Change: 11.5 cents or 0.8%

Platinum Price Close Today: 1,224.30
Change: 34.90 or 2.9%

Palladium Price Close Today: 262.90
Change: 0.95 or 0.4%

Gold Silver Ratio Today: 68.18
Change: -0.529 or -0.8%

Dow Industrial: 9,093.24
Change: 23.95 or 0.3%

US Dollar Index: 78.65
Change: -0.21 or -0.3%

You can say the same thing about markets that we say about the weather in Tennessee: "If you don't like it, just wait a while. It's bound to change." One great hurdle to reading markets is our own human tendency to project today into tomorrow -- forever. But if markets were easy to read, then everybody would be rich, good looking, and nobody would have bad breath. We all know markets are just the opposite. About the time you think you've got them absolutely scoped out, they do exactly the opposite. So about twice a day you have to slap yourself -- hard -- and ask, "What if I'm all wrong?"

Hence I invite y'all today to meditate on the US DOLLAR INDEX. It appears to me to be headed for oblivion, right after it crashes through 76. Then I look at that chart from another angle and wonder whether it might not catch around 77.70, grab hold, and fool us all by rallying for 3 - 6 months. Need I add that would put a hurricane headwind in the faces of silver and gold? And stocks?

Ponder the GOLD PRICE chart as well. Gold seems to have leaden feet, although it keeps climbing. Silver and Platinum aren't bothered, but gold stays slow. For the past 2 weeks the SILVER PRICE has risen twice as fast as gold. Nor do I like the gold/silver ratio chart, either.

Wall Street says, "Bull markets always climb a wall of worry." Perhaps I am only worrying, but markets often blindside the unwary. I'm not implying that the long term bull market for silver and gold has changed, only that the next three to six months might hold hardship for silver and gold investors, depending on what the less-than-almighty US dollar does.

Today the US DOLLAR INDEX merely continued to drop, down 21 basis points to 78.647. Past lows occurred at 78.33 and 77.70, so the dollar will find support at those levels. Below that is only 76.

GOLD rose a dainty fifty cents today to close at $953.30. The actual barrier here is $955, so that's the goal, a close above $955. At any close above $940 the uptrend remains intact. Main chance for tomorrow is a lower gold price,but not by much.

SILVER continues to outperform gold, rising again today 11.5 cents to close on Comex at $13.985. That looks like a cheap shot from the Nice Government Men to me, since a lousy 1.5 cents would have put silver over the psychologically crucial $14.00 cents. Regardless, it traded up to $14.05 right after Comex close.

Speaking of NGM, stocks smelled largely of mackerel today. The Dow remained below Friday's close literally all day, then popped up for a 15.27 point gain in the last 15 minutes of trading. Yep, that's possible, but is it likely outside some parallel universe? Still not clear to me whether stocks will proceed to 9,700 or break down from here.

DOW IN GOLD DOLLARS still cannot pierce G$197 (9.530 oz). Once it broke through G$194, it should have moved quickly higher, but has not, having been blocked at G$197. Doesn't say much for stocks outperforming gold in the near future.

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.