Friday, August 14, 2009

Use Every Drop in Silver and Gold as an Opportunity to Buy More at a Discount

Gold Price Close Today : 947.00
Gold Price Close 7 August: 957.30
Change: -10.30 or -1.1%

Silver Price Close Today : 14.715
Silver Price Close 7 August: 14.661
Change: .054 cents or 0.4%

Platinum Price Close Today: 1,260.50
Platinum Price Close 7 August: 1,258.50
Change: 2.00 or 0.2%

Palladium Price Close Today: 276.00
Palladium Price Close 7 August: 274.10
Change: 1.900 or 0.7%

Gold Silver Ratio
Today: 64.36
Gold Silver Ratio 7 August: 65.30
Change: -0.94 or -1.4%

Dow Industrial: 9,321.40
Dow Industrial 7 August: 9,372.49
Change: -51.09

US Dollar Index: 78.801
US Dollar Index 7 August: 78.955
Change: -0.154 or -0.2%

The dark shadow across the market remains the US DOLLAR INDEX. Will it stage a surprise rally, or will it keep on falling? Today the dollar index reversed course upward, springing off 78.33 support to close at 78.801, up 39.2 basis points. It is still too early to tell for sure, but dollar index appears to be tracing out an inverted head and shoulders, which points to a rally. If the dollar index falls below 78.33, then it will fall much further, to 74 minimum. The market will tell us which way the dollar will move next. I haven't a clue.

Remember that the US dollar is not the sole determinant of GOLD and SILVER PRICES, but it is the world's most widely used currency. Silver and gold are alternative to the dollar as they are to all other fiat currencies, so whenever the dollar strengthens, gold and silver find it harder to rise. A surprise dollar rally might delay gold's push through $1,000 until early next year.

STOCKS didn't like a stronger dollar, either. The Dow closed at 9,321.40, down 76.79, and the S&P500 closed at 1,004.10, down 8.63. Stocks have made a good run, and whether they extend it or not, are still in line for a correction. Use stock strength to sell any you still own, and turn the proceeds into silver and gold.

Look at the weekly scoreboard above and you will immediately grasp an uneasy contradiction. The SILVER PRICE rose 5.4 cents for the week, the GOLD PRICE fell $10.30. Gold closed the week at $947 (down 7.790 today), with silver at $14.715 (down 26.5 cents today). This looks like silver and gold rallied to previous resistance ($955 and $15.00) and fell back, unable to pierce them.

Next week silver and gold might move lower in a correction, and that's most likely. On the other hand, if gold passes through $955 on Monday, both metals will climb strongly next week.

I don’t believe this forebodes any major correction. Gold I don't expect to see below $930 or so, or silver below $14.00 cents. Recall, however, that I have repeatedly said that gold and silver would move "sidewise to higher" over August.

More and more, we hear new customers saying, "I don't know anything about silver and gold, but the dollar has me so scared I have to do something about it." Then they make BIG commitments to metals. That harbinger hints at something much more portentous, namely, a widespread loss of confidence in the dollar. For a fiat currency that is built on confidence alone, that's not good news.

Use every drop in silver and gold as an opportunity to buy more at a discount. Nothing long term has changed. The U.S. dollar is a dead man walking, and will be wrecked in the next three years.

Yesterday I wrote,"Every day that passes impresses on my mind some new fact pointing to terrible turmoil in the US economy and in society. Pull in your horns. Get your business straight. Don't leave lots of money lying around in banks. Get physical gold and silver, and get it delivered into your own hands. Hold it someplace safe, and that does not mean a bank.

"And make sure your back door is working." I thought that was clear, but from the number of e-mail questions I got, it wasn't. If you store your gold or silver in a bank, ask yourself this question: "How will you get to your gold and silver when the bank is closed?" Will you join the line on the sidewalk outside? Of course, if you don't feel comfortable with a safe in your home, then leave them in the bank. Personally, I'll take my chances with those who rob you with a sixgun, sooner than those who rob you with a fountain pen.

What did I mean about back doors? Simply that no rabbit digs a hole with only one way out. In case everything goes wrong, you need to plan what you will do. Run to friends or relatives in the country? Have a country home ready? If things get rough where you are, where will you go? Most people wait too long to go out that back door, and become refugees. You know what refugees are? People on their way to die some place else.

This is not fear-mongering, it's simple realism. Besides, on the other side of this turmoil, somebody will build a new economy, a just economy with genuine freedom. Wouldn't you like to be part of that re-building?

Better start planning now. And check the hinges on your back door.

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.