Friday, October 09, 2009

While the Gold Price Gained 4.6% This Week, the Silver Price Piled on 9.1%

Gold Price Close Today : 1,047.80
Gold Price Close 02 October : 1,003.20
Change: 44.60 or 4.4%

Silver Price Close Today : 17.675
Silver Price Close 25 September : 16.208
Change: 1.4670 or 9.1%

Platinum Price Close Today: 1,329.50
Platinum Price Close 02 October: 1,281.50
Change: 48.000 or 3.7%

Palladium Price Close Today: 320.15
Palladium Price Close 02 October: 297.75
Change: 22.400 or 7.5%

Gold Silver Ratio Today: 59.28
Gold Silver Ratio 02 October: 61.90
Change: -2.61 or -4.2%

Dow Industrial: 9,864.94
Dow 02 October: 9,487.67
Change: 377.270 or 4.0%

US Dollar Index: 76.450
US Dollar 02 October: 76.912
Change: -0.462 or -0.6%

Yesterday I got it clean wrong expecting higher SILVER and GOLD PRICES today. Profit takers just couldn't resist. Today may be whispering that a short correction is beginning, down as far as $1,022.50, unless of course the GOLD PRICE clears $1,060 (yesterday's high) on Monday. That would mean the advance is continuing unbroken, having finished whatever small correction it will make with this day's decline. The Gold Price dropped today $7.60 to $1,047.80. I'm still not used to writing a comma in the gold price.

While the gold price gained 4.6% this week, the SILVER PRICE piled on 9.1%. There's that volatility again, kicking you on the way down but thrilling your heart on the way up. Gold silver ratio fell 4.2%, but not yet low enough for a swap. I'm expecting the opportunity to hit the last days of this year or first days of next.

BOTTOM LINE: Gold has broken through long term resistance at $1,000, touched back to confirm the breakout,and steadily advanced higher. 95% probability says this marks beginning of a rally that will carry to $1,325. Other 5% says it might reach $1,140 (thanks, Bob the Technical Genius, for giving me something to fret about) and make one more downward leg to $680. I'll go with the $1,325 outlook. I believe silver and gold prices are moving much higher, and fast. Third leg up is beginning, the most bodacious, ferocious, and profitable leg.

Buy the breakout.
Hold all positions, sell nothing.
Wildest part of the ride is beginning.

'Twas a big week for gold and silver, but not so big for the US Dollar.

Today the dollar gained back 48.4 basis points of the roughly 150 bps it has lost in the past three days. Yet at today's closing of 76.45, the US dollar index remains 46.2 bps below last weeks close, down 0.6%. The dollar index may be rounding thorough a bottom but O! How slowly! It must exceed 77.63, the 50 day moving average, to change direction and turn up. The weekly chart shows an unchanged downtrend.

STOCKS have nearly reached their September high, and now stand at a fork in the road. The fork to the high road leads to 10,000, maybe a 10,500 Dow. The fork to the low road simply collapses. For a short while longer, bet on the high road. Sell stocks now if you have any left.

Dow closed today at 9,864.94, up 78.07. S&P closed at 1071.49, up 6.01.

Last spring the Dow in Gold Dollars (value of the Dow measured in gold) started to rise. When it reached the G$193 - G$195 area (9.336 oz - 9.433 oz) it stalled a while. The rise peaked in August at G$208.78 ( 10.100 oz), and now has sunk back to that breakout point. That and the down-turned moving averages forecast much lower stock values against gold.

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.