Thursday, September 03, 2009

You are Probably Watching the Last Days of Gold Below US$1,000 -- Forever

Gold Price Close Today : 993.80
Change: 16.20 or 1.7%

Silver Price Close Today : 16.135
Change: 79.5 cents or 5.2%

Dow Industrial: 9,344.61
Change: 63.94 or 0.7%

US Dollar Index: 78.44
Change: 0.05 or 0.1%

The great H.L. Hunt said, "Never get really elated in victory; when times are tough, never get down." I'm as delighted as any other silver bug right now, but let's keep our heads screwed on.

In the past two (2) days, the GOLD PRICE has risen US$40.30; the SILVER PRICE has risen $1.20. Quite literally, gold is knocking on the US$1,000 door.

What impresses me about this? These rises have occurred not at the top of a long-time movement, but upon breakout from a triangle. The furious moves show not a rally ending, but a rally beginning. Volume is strong, confirming the breakout. (Check "color volume" beneath the GLD and SLV charts. Note the gaps up on both charts.)

After two such strong days, 'twouldn't surprise me that silver and gold prices backed off tomorrow, only to resume their advance on Monday.

Today gold closed on Comex up $16.20 at US$993.80. Silver rose 79.5 cents to end on Comex at $16.135.

GOLD'S next move must be to cross US$1000. That sets up a climb to US$1,325. SILVER has climbed above its 2 June 2009 high at $15.945, and
closed over $16.00. It has crossed above the downtrend line from last June. It is set up to run, so get out of the way.

Add fuel to the fire. Gold has plainly broken out upside in Euros. In Yen it has not yet broken out, but has turned up strongly and is close to breaking out. Indicators have turned up. Point is, this metals rally has not been sparked by a falling dollar, but hints to be a rally against all fiat currencies.

Unless the US dollar blindsides gold with a rally, you are probably watching the last days of gold below US$1,000 -- forever.

The dollar, in fact, rose a bit today up 5.3 basis points to 78.437. The dollar index has traded into a tight triangle. A close below 78 will be fatal, a close above 79 could lead to a rally. However, the silver and gold markets are signalling that they know something the currency markets don't yet know.

Meanwhile the gold/silver ratio has acted precisely as it should, falling from 63.526 three days ago to 61.592 today. And the Dow in Gold Dollars has collapsed from G$208 (10.031 oz) to G$194.38 (9.375 oz). Are y'all beginning to understand why I keep recommending y'all buy more silver than gold?

STOCKS made good their losses today. Dow rose 63.94 to 9,344.61, and S&P500 climbed over 1,000 to clsoe at 1,003.24, up 8.49. Stay out of stocks. Watch from a distance. Sell any you still have, other than precious metals stocks.

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.