Wednesday, September 09, 2009

The Gold Price Must Not Show a Deep Correction Here

Gold Price Close Today : 995.30
Change: -2.60 or -0.3%

Silver Price Close Today : 16.443
Change: 4.5 cents or -0.3%

Platinum Price Close Today: 1275.50
Change: -11.50 or -0.9%

Palladium Price Close Today: 292.75
Change: -4.25 or -1.4%

Gold Silver Ratio Today: 60.53
Change: 0.008 or 0.0%

Dow Industrial: 9,547.22
Change: 49.88 or 0.5%

US Dollar Index: 76.99
Change: -0.29 or -0.4%

Today the GOLD PRICE backed off slightly, down $2.60 to US$995.30. Low was US$986.95. The daily chart shows gold rallying from $996 in a rounding top through the day, then dropping off at 2:00 p.m. Right now it's trading at $992.50.

This is no surprise, it is merely a correction rolling out. Yet I remain persuaded that gold must not show a deep correction here, not below $975 or so. The low close is liable to be $980 - $982, maybe with an intraday plunge toward $975. I still do not believe it will break $970.

Before the US markets opened the bears and shorts hit silver hard, but couldn't drive the SILVER PRICE below $16.20. Then it formed a huge dome, a rounding top, and fell back to $16.30ish by 2:00. On Comex silver closed at $16.443, down 4.5 cents, but it's trading right now at $16.3250.

Part of the answer to the metal's relentless advance in the last two weeks came out yesterday from Barrick, world's largest gold mining company. They announced they would buy back their five billion worth of gold hedges (forward sales) and sell $3 bn in stock to raise the money. Looks as if they were rather clumsily buying back the hedge, driving up the market. But they didn't say that, I'm just guessing their buying contributed much to gold demand. Apparently they haven't finished covering the shorts yet, and they will take a $5.6 billion loss on covering them.

Who is Barrick? 'Twas a gold mining star of the 1980s, put together from nothing, and then in the 1990s they discovered hedging their production, i.e., selling it before it was mined to lock in a price for future delivery. Maybe this was logic, or maybe it was co-operation -- we'll never know, but 'tis coincidental that about the time Barrick loaded on the hedges, the gold cartel (Nice Government Men and their running dog lackeys the bullion banks, chiefly Goldman Sachs) was manipulating gold downward. Mining companies forward sales certainly didn't hurt their effort.

Anyway, with gold about to breach $1,000, the game's over. They lost. Looks like partnership with government isn't all it's cracked up to be. This follows exactly The Moneychanger's Law Of Government Largesse: "All government money comes with a sock in the jaw."

The US DOLLAR INDEX continues to confirm its breakdown, falling another 29 basis points today to 76.988. The world trusteth not the scrofulous dollar.

Stocks edged up again. Dow rose 49.88 to close at 9,547.22 while S&P500 rose 7.98 to 1,033.37. Somewhere along here stocks are going to offer a spectacular shorting opportunity, but not yet.

On Monday, 21 September 2009 at 6:00 p.m. I will be speaking in Columbia, South Carolina on "Surviving the Depression and Reviving Local Economies." Location will be
Columbia Conference Center
(803) 772-9811
169 Laurelhurst Ave.
Columbia, South Carolina 29210
You can make reservations at
Y'all come!

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.