Friday, October 02, 2009

The Gold Price Traded Through US$1,000, and has Touched Back to the Point of Breakout

Gold Price Close Today : 1,003.20
Gold Price Close 25 September : 990.20
Change: 13.00

Silver Price Close Today : 16.208
Silver Price Close 25 September : 16.038
Change: 17.00

Platinum Price Close Today: 1,281.50
Platinum Price Close 25 September: 1,278.40
Change: 3.100

Palladium Price Close Today: 297.75
Palladium Price Close 25 September: 294.90
Change: 2.850

Gold Silver Ratio Today: 61.90
Gold Silver Ratio 25 September: 61.74
Change: 0.15

Dow Industrial: 9,487.67
Dow 25 September: 9,655.19
Change: -167.520

US Dollar Index: 76.912
US Dollar 25 September: 76.812
Change: 0.100

Let the week speak, and let every mouth keep silence. Numbers, though mute, speak for themselves.

Mark! Both silver and gold rose for the week. Today gold closed at US$1,003.20, up 3.70 for the day and $13 for the week. Silver fell 21 cents today to close the week at 16.208 That was still 17 cents higher than last week's close.

Looking back at my weekly reports for the 4th & 11 of September, it's plain I've been expecting gold to runaway after clearing US$1,000. That hasn't happened yet. Was I dead wrong?

Nope, I don't think so, because gold has spent so much time -- 3+ weeks -- oscillating around US$1,000. If the gold price were not going to rise further, it would have already broken US$975, but it hasn't.

Only silver has flicked a fly into this ointment, with its last two days' weakness. Yet how weak really was it? Not weak enough to break critical $16 cent support. Maybe it was just traders taking profits.

As long as the gold price closeth not below US$975, and silver closeth not below $15 (yes, $15), I have to call this a "rally in progress."

Lo, I am not so slow or arrogant as to fail to perceive how far out on a limb this pushes me, but the charts and the logic won't let me climb down. Gold traded through US$1,000, and has touched back to the point of breakout. That's a typical market move and in no way announces a rally ending.

Of course, we live in Lunatickworld, where any morning we might wake up to find our glorious people's government has repealed the law of gravity, or closed all the banks to save Wall Street, or replaced the dollar as the national currency with stainless steel pot lids. In such a world, readers often ask me, what good is technical analysis? It's a guide, only a guide. Remember that the fundamentals are all with silver and gold, and every single day Ben Bernanke and the entire Washington administration wake up figuring what they they can do today to help silver and gold.

Meanwhile, back to the US Dollar. No question in my mind the US Dollar index is headed for its 50 day moving average at 77.84, or 77.50 resistance. How long will this rally last? Two weeks, maybe two months if the media and the Fed can really pump up the deflation scare. After that they will return to business as usual, inflating. You're just watching the drunk at the wheel, mashing the accelerator until he gets scared, then slamming on the monetary brakes.

STOCKS yesterday suffered a "90% down day." Usually those are the Capistrano swallows of a big dive coming. If you have not already sold all your stocks -- yes, those in IRAs, 401(k)s, and mutual funds -- better do it quickly. A chance yet lingers that stocks will rally one last time to penetrate 10,000 weakly, but a close below 9,250 next week gainsays that forever.

Y'all enjoy your weekend.

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.