Tuesday, October 27, 2009

Farthest Silver and Gold Prices Might Yet Fall is to $16.00 and $1,020

Gold Price Close Today : 1034.70
Change: -7.40 or -0.7%

Silver Price Close Today : 16.531
Change: -0.553 or -3.2%

Platinum Price Close Today: 1315.00
Change: -24.00 or -1.8%

Palladium Price Close Today: 327.50
Change: -4.00 or -1.2%

Gold Silver Ratio Today: 62.59
Change: -0.427 or -0.7%

Dow Industrial: 9,882.17
Change: -14.21 or 0.1%

US Dollar Index: 76.15
Change: 0.15 or 0.2%

Let us talk of crookedness and crooks Embezzelers that cook the books, And option sellers who use their hooks To drive the price down for us schnooks.

Yes, fellow sufferers, today was options expiration day, so "somebody" found it necessary, expedient, and profitable to drive down silver and gold prices so that the call options they had sold didn't come a cropper and cost them money. As insurance companies are made to collect premiums and not to pay claims, so option sellers are in business to sell options, not to pay off when they make good. Hence it doeth them much good when prices can be driven down on options expiry so that all those call options they've sold expire worthless. It saves them so much money.

Here's what I mean. At Comex close, which is the price basis for gold and silver options, gold closed down $7.40 at $1,034.70 and silver closed at 16.531, down 55.3 cents. Yet in the aftermarket gold has risen over $5 and silver over 20 cents. Yeah, just a lucky coincidence for all those folks who sold options, right? And won't it be even more fascinating if today proves to be the low for silver and gold? More on that below.

What makes the larceny all the more obvious is the US dollar index's stingy performance today, up 14.6 bps to 76.153. That's not enough gain to move horsefeathers, much less the silver and gold markets, but there 'tis. Still expect the dollar index to hit its 50 DMA at least, 76.88 or even 77.

STOCKS were confused today. Dow rose 14.21 to 9,882.17 while S&P500 fell 3.54 to 1,063.41. Other indices fell. Confusion suggests the down move might be finished and stocks turning around. Still watching for one last push up to 10,375, the 50% correction.

Believe it or not, 'tis just barely possible today was the bottom in silver and gold. Farthest silver and gold prices might yet fall is to 16.00 and $1,020. As I've been saying, my interpretation is all wrong if they close below those points. I've been expecting a low in place by 30 October latest, because that's when the high is due in the Gold/Silver ratio, and the ratio usually peaks about the same time both metals bottom. By Friday, I want to have all my buying done.

I still have a few Mexican two and 2.5 pesos, 5 pesos, and Dutch 10 guilders available priced like one ounce coins. First come, first served.

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.