Tuesday, October 20, 2009

Expect a Gold Price Low Between $1,041 and $1,035, With Possible Spike As Low As $1,020

Gold Price Close Today : 1057.80
Change: 0.50 or 0.0%

Silver Price Close Today : 17.543
Change: 6.7 or 1.4%

Platinum Price Close Today: 1346.50
Change: -16.00 or -1.2%

Palladium Price Close Today: 337.10
Change: 1.00 or 0.3%

Gold Silver Ratio Today: 60.30
Change: 0.031 or 0.1%

Dow Industrial: 10,041.48
Change: -50.71 or -0.5%

US Dollar Index: 75.51
Change: 0.26 or 0.3%

You can learn a lot by looking at a five day chart. It irons out the noisy details. the gold price, for instance, couldn't hold ground above $1,065 melting away toward $1,055 with a low at $1,052.75. On Comex gold closed up 50 cents at $1,057.80. Appears to be the end of the up-move and last of correction coming. Expect a low between $1,041 and $1,035, with possible spike as low as $1,020. Begin buying at $1,040. Any down move ought to end by 30 October. A close below $1,020 says I'm wrong and deep correction will follow; close above $1,065 turns everything around and flashes a renewed rally.

Silver fell 6.7 cents to 17.5430 on Comex. Last Thursday and today silver challenged 18.00 without success, so watch for a test of 17.20 - 16.80 next. Possible it might spike to 16.00. If it breaks that, 14.00 is the next busstop. My expectation is 17.20, not lower, but then, I am often wrong.

US Dollar index rose 25.8 basis points, so dodged the trap door at 75.00. Support is now 75.25, but there's no sign or proof of any bottom yet. We have to keep expecting a dollar rally, if for no other reason because it is now so universally despised. Also the high rollers are now working the dollar carry trade, borrowing dollars with near zero interest rates and investing them in trades they think will pay off big, like stocks. Clearly, this is a recipe for shearing. When the dollar carry trade starts unwinding, precipitated by a rising dollar, the shorts will panic and cover and dollar will soar. Well, insofar as a dodo bird can soar. It's relative, you know.

STOCKS gave back some of yesterday's gains. The Dow dropped 50.71 to 10,041.48 and S&P500 fell 6.85 to 1,091.06. Dow still headed for that 10,375 mark and 50% retracement. Sell 'em if you got 'em.

My friend Bob the Technical genius called today with some astonishing news. JP Morgan's commodity arm in London announced that it would begin accepting gold for margin deposits. Astounding! Maybe they need gold to cover shorts, but notwithstanding this re-introduces gold as money.

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.