Monday, October 05, 2009

Buy Gold On Any Close Over $1,018.90

Gold Price Close Today : 1016.70
Change: 13.50 or 1.3%

Silver Price Close Today : 16.513
Change: 30.1 or 1.9%

Platinum Price Close Today: 1,295.30
Change: 12.00 or 0.9%

Palladium Price Close Today: 301.85
Change: 6.00 or 2.0%

Gold Silver Ratio Today: 61.57
Change: 0.806 or 1.3%

Dow Industrial: 9,599.75
Change: 112.08 or 1.2%

US Dollar Index: 76.70
Change: -0.24 or -0.3%

Once the GOLD PRICE pierced US$1,005, it pulled on its seven league boots and jumped clean to US$1,017.50 and stayed, closing at US$1,016.70, up $13.50. Gold's next barrier to break is the $1,018.90 high close from 16 Sept. A failure there would be very bad news, but at the present speed of gold it appears likely to clear that hurdle this week. Remember that from below gold must not break $985.

If these gold prices seem awfully high, surrounded by a cloud of reasons gold shouldn't rally further, recall the market proverb, "A bull market always climbs a wall of worry." Buy any close over $1,018.90, and buy lots more on the 2nd day close above that amount.

There's a pattern silver fans must get used to, or keep on biting your nails to the quick: gold moves first, then silverovertakes. Now it's not always that way, but silver's much smaller market size makesit dance with gold as penny stocks dance with blue chips. Namely, penny stocks stocks speed up toward the end of a blue chip rally. This is not, however, always so. The SILVER PRICE rose ahead of gold earlier this year. From last November's lows to recent highs the gold price rose only 44.7% while the silver price rose 100.7%. Generally, though, silver will accelerate and outperform toward the end of gold's rally. That's why the trough of the Gold/Silver Ratio usually marks the price peak in Gold and Silver as well, or within a few days.

Buy more silver when gold signals a buy.

After four down days in a row, the Dow turned up today. It closed at 9,566.75, up 112.08, but couldn't quite climb above the technically and psychologically critical 9,600 resistance. S&P500 rose also, 15.25, to 1,040.46. Stay away from stocks.

Since it began rallying from G$145.37 (7.032 oz) last March, the Dow in Gold Dollars has reached a high of G$209.47(10.133 oz, 27 August). Since then it has O so slowly rolled over to today's G$195.18 (9.442 oz), a new low. Since the DiG$ has now crossed beneath the fast-moving 17 day moving average and the slower 50 DMA, the only confirmation needed for a big fall is crossing beneath the 200 DMA, today at G$188.48 (9.118 oz).

Why do I care? Because the DiG$ is my most faithful and trustworthy indicator for the future of stocks and of gold. It is telling us that stocks are about to fall and gold about to rise.

The US DOLLAR INDEX crept to 77 midday, then just fainted dead away. It closed at 76.697, down 23.6 basis points today and about 50 bps the last two days. The $ Index has fallen 14.4% from its 4 March 2009 52-week-high. The size of that fall so far whispers that more action to the downside is coming. To rally the $ Index must rise above 77.50, then 79. However, for the past 9-1/2 months the 50 DMA has capped the $ Index, so no rally is possible till it breaks above the 50 DMA and stays there. 50 DMA stands now at 77.80.

On 13 October 2009 my granddaughter, Caroline Sanders, 26 months old, will have her third heart surgery. In the past y'all have very kindly prayed for her recovery, and I would be most deeply thankful if y'all would pray for her during this surgery. Don't forget her parents, Justin & Ellen. Sometimes I think the surgery is harder on them than it is on Caroline.

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.