Friday, November 20, 2009

Gold's Big Correction Won't Come Before The Gold Price Finishes This Rally, and Its Target is $1,300

Gold Price Close Today : 1,146.50
Gold Price Close Nov 13: 1,116.10
Change: 30.40 or 2.7%

Silver Price Close Today : 18.433
Silver Price Close Nov 13: 17.37
Change: 1.0630 or 6.1%

Platinum Price Close Today: 1,447.40
Platinum Price Close Nov 13: 1,393.10
Change: 54.30 or 3.9%

Palladium Price Close Today: 364.95
Platinum Price Close Nov 13: 356.80
Change: 8.15 or 2.3%

Gold Silver Ratio Today: 61.91
Gold Silver Ratio Nov 13: 63.06
Change: -1.15 or -1.8%

Dow Industrial: 10,318.16
Dow Industrial Nov 13: 10270.47
Change: 47.69 or 0.5%

US Dollar Index: 75.579
US Dollar Index Nov 13: 75.286
Change:0.29 or 0.4%

The GOLD PRICE closed the week up $30.40, and rose on the day $5 to close on Comex at $1,146.50. In the aftermarket it's trading above $1,150.00. Big news of the week is Gold's running attack on $1,150, but it hasn't beaten down that gate yet. Am I nervous that this rally might end? Well, yes and no. Yes, a correction is long overdue and could come at any time, but only a short and shallow one. The big correction won't come before gold finishes this rally, and its target is $1,300. What makes me most fidgety of all is all this coverage of gold on TV, radio, newspapers. That's feels like the kiss of death, from a contrary standpoint, all those parvenu speculators crowding into gold. They will head for the exits and take their support with them just as quickly if gold cracks. A fast decline would shake out all these weak hands, and good enough for 'em. But gold's climb since last summer has been relentless, and wise men don't fight bull markets. Let your profits run and cut your losses short.

The SILVER PRICE, blessed silver, was the star performer this week, with a $1.02 rise on Monday. Looking back over the last year and some, rises like that, oddly enough, do not signal tops. They occur more often after bottoms and when the silver price is readying a big upmove. Little resistance stands between silver and the last (and all-time) high at $20.68. Above all is uncharted territory, as with the gold price. Anything can happen. Today the silver price closed $18.433, down 1.4 cents, not yet able to push through $18.50.

The end is NOT near for SILVER and GOLD PRICES. I told y'all earlier that this is a third leg up and should be a wild and woolly ride, and so far it has been. Much more upside over 5 or more years lies in store for silver and gold.

STOCKS are teetering above support at 10,120. If they break that line, then look out 9,700. Yesterday & today the Dow was stymied at 10,340. Friday of last week through Thursday the Dow traced out what appears to be an island top. (Technically there should be gaps up at either end of the island and they're not, but the appearance is nearly identical, so the same forces are probably at play.) Stay out of stocks. They have reached the 50% correction point and are now slowly turning over. A close over 10,440 would lead to a brief spike above that mark, maybe reaching 11,000, but you don't want to hang around for that. Once the decline starts the carnage will be appalling.

The US DOLLAR INDEX is trying to bottom, but not too convincingly. It has made a double bottom at 75/74.80 & has refused to fall through, although it has also refused to do more than trade sideways. Today was its best day this week with a 29 basis point climb to close at 75.579. Watch out for a sudden dollar rally. Everybody in the Cosmos is short dollars and expects the dollar to crash and some are even predicting a dollar collapse before year end. Rumours of the dollar's death are premature. Any dollar rally will punish the smart guys in the dollar carry trade who have borrowed cheap and (they hope) depreciating dollars to speculate in other, hotter markets. When dollar rallies they will be squeezed to death between the Scylla of a rising dollar and the Carybdis of sinking stocks and commodities.

A reader asked me what the "aftermarket" is. That's sort of an archaic phrase nowadays, but it means all the trading after the Comex close at 13:30 Eastern time. Since computerized trading opened up after Comex close, there's really unbroken trading throughout the day in the US, and then around the world. Silver and gold trade in 24 hour a day markets.

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.