Tuesday, November 17, 2009

If Silver and Gold Prices Can Pierce $18.50 and $1,140, They Will Run Much Further, Much Longer.

Gold Price Close Today : 1138.80
Change: 0.20 or 0%

Silver Price Close Today : 18.377
Change: -1.3 cents or -0.1%

Platinum Price Close Today: 1458.00
Change: 3.60 or 0.2%

Palladium Price Close Today: 370.70
Change: -5.55 or -1.5%

Gold Silver Ratio Today: 61.97
Change: 0.011 or 0.0%

Dow Industrial: 10,437.42
Change: 30.46 or 0.3%

US Dollar Index: 75.28
Change: 0.37 or 0.5%

The US DOLLAR INDEX flirted with suicide today at a 74.80 low, but a "miracle" intervened for the scrofulous dollar and it ended the day up 39.6 basis points at 75.306 -- saved for the nonce but not far from the line of fire. Since mid-
October the dollar hath thrice tested 75-74.80 support. I don't believe in "triple bottoms" because usually they are only preludes to a breakdown. To restore credibility
the Dollar Index needs to close above 76.80. We'll see.

The GOLD PRICE had declined overnight from yesterday's highs to $1,136.60. Driven all the way to $1,127.20 before New York opened, gold nevertheless rose steadily throughout the day. On Comex gold closed near its $1,141.84 high at $1,138.80, up 20 cents. Bad that it didn't close higher, but good, very good, that it declined, bounced off $1,127, and rose to close even with yesterday. And, lo, in the aftermarket it tradeth now at $1,140.50.

SILVER's chart resembles gold's. From a top yesterday above $18.40, silver traded overnight as low as $18.06. Yet the mighty white metal handily fought off the attack, defended 1800 cents, and rose steadily to close on Comex at $18.377, down 1.3c. Well, think on it. Silver rose 102 cents yesterday. Such huge gains don't come every day, an da rest is in order.

THE GREAT CONUNDRUM is whether silver and gold prices can rise further from these seemingly nosebleed heights. There's that wall of worry again. Y'all remember Kenny Rogers' song, "The Gambler"? "You gotta know when to hold 'em, and know when to fold 'em." But how do you know?

Over the last 11 months both silver and gold have been trading with monotonous and unwonted regularity, up and down, up and down, about 105 days from Gold/Silver Ratio trough to trough. Never saw the like before, up and down at the same measured pace. About now when traders have been lulled into complacency, the market will switch and change the pace, lengthening or shortening the cycle, truncating or extending the move. This feels like fall 2007. Remember how both metals rose from August right through to March 2008? Nothing could stop them. Sure, both are overbought now, but they can always get more overbought still.

Gold's indicators are high, seeming to signal a top near. Silver's are not so high, and have room to rise higher. Both metals stand at a crossroads. If silver and gold can pierce $18.50 and $1,140, they will run much further, much longer. If not, then first a correction and then the run-up. Either way, $1,300 gold remains the technical target, and crazy silver is aiming at $23.00 to $33.00.

STOCKS fought fiercely to stay in positive territory today. Most of the day they traded at a loss, the Dow dropping as low as 10,362 and the S&P500 as low as 1,103. Much like silver and gold, stocks have between yesterday and today drawn a double top and must penetrate that ceiling (10,440) or fall back. Dow closed today up 30.46 at 10,437.42; S&P rose 1.02 to close 1,110.32. Nasdaq also rose, but other indices dropped marginally. Smells of confusion and indecision. Stay away from stocks.

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.