Monday, November 30, 2009

Question Now for Silver and Gold Prices is, What Happens Next?

Gold Price Close Today : 1181.10
Change: 6.90 or 0.6%

Silver Price Close Today : 18.495
Change: 19.3 cents or 1.1%

Platinum Price Close Today: 1455.50
Change: 3.00 or 0.2%

Palladium Price Close Today: 365.20
Change: -4.00 or -1.1%

Gold Silver Ratio Today: 63.86
Change: 0.366 or 0.6%

Dow Industrial: 10,309.92
Change: -154.48 or -1.5%

US Dollar Index: 74.81
Change: -0.10 or -0.1%

Dubai, Shmubai, what else is new? Did you ever see any pictures of the Palm Jambalaya they were building? Spending like they didn't know what money is, and y'all are surprised they turned up defaulting on $80 billion in debt? Shocking.

Market wasn't terribly surprised either. Dollar jumped, but only barely on the news (conveniently announced on Thanksgiving Day, when all US markets are closed). Ended the day at 75, which from 74.346 was up 46.7 basis points, not the response you'd expect to an earthshaking crisis. The GOLD PRICE closed Friday at $1,174.20, down 16 bucks from all time highs. Yet again, who is surprised, or alarmed? No big move. The SILVER PRICE spiked to $17.67, then closed at $18.30, in the end merely proving that the $18.00 - $18.30 support level will hold.

I'm not saying that SILVER and GOLD PRICES won't lengthen out a correction, but there's no proof yet. In fact, to go through a day like the Dubai announcement and a slight panic, drop but not too sharply, then close up today, folks, that's great performance, not weak.

Today the gold price closed up $6.90 at $1,181.10 and the silver price rose 19.3 cents to end at $18.495 on Comex. I warn in passing that silver and gold prices remain vulnerable to a surprise dollar rally, but so far, no sign of anything falling apart.

Question now for silver and gold prices is, what happens next? Will they hold on or fall? As in the crisis of Fall 2008 gold coins have begun disappearing and premiums are rising. The US Mint helps nothing by halting minting of gold and silver American Eagles. One wholesaler refuses to sell me Krugerrands at all because he can't find them. Others are quoting 2 - 4 week delivery delays on everything but Austrian 100 coronas and Mexiican 50 pesos. None of that argues gold is about to fall. Just the opposite, it shouts that physical demand is surging.

Say to those who are shrieking and pulling out hair, "Grow up. It's a market. It's volatile, and on top of that you have thousands of people working for the Fed and the US government paid thousands of dollars a year to make them more valuable still. Got to get used to it."

US dollar index, as said, rose less than 50 basis points on Friday, and dropped about 20 today to close at 74.813. 'Tain't exactly running away upside.

STOCKS rose today 34.92 to close the Dow at 10,344.84, after Friday's 135 point drop. S&P 500 today closed up 4.14 at 1,095.63. If the Dow closes below 10,120, it sinks.

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.