Thursday, December 03, 2009

Last Time The Gold Price Was This Overbought Occurred at an Interim Top in Oct. 2007 at $850

Gold Price Close Today : 1207.50
Change: -4.50 or -0.4%

Silver Price Close Today : 18.845
Change: -45.0 cents or -2.3%

Platinum Price Close Today: 1486.00
Change: 27.00 or 1.9%

Palladium Price Close Today: 386.00
Change: 14.00 or 3.8%

Gold Silver Ratio Today: 64.08
Change: 1.261 or 2.0%

Dow Industrial: 10,366.15
Change: -86.53 or -0.8%

US Dollar Index: 74.84
Change: 0.13 or 0.2%

The GOLD PRICE eroded all day, clearly reacting from its $1,221.65 high. If $1,200 can't contain its fall tomorrow, then next logical support is $1,190, then $1,180, both stepping stones on the way up.

Doesn't bother me a bit that gold is correcting. It will help gold the same way pruning makes a peach tree more fruitful.

Last time gold was this overbought occurred at an interim top in Oct. 2007 at $850. It stayed overbought off and on (interrupted by one correction) for two months. Afterward (after a correction trimmed back the overbought condition) it soared to its 2008 high at $1,000. It was actually less overbought at that top than it had been in October 2007.

Any short declines in the SILVER PRICE should be stopped at $18.50, or even $18.00. Silver is lagging gold, sending the ratio higher, but silver's strongest performance always kicks in toward the END of a rally.

STOCKS are collapsing against silver and gold. Dow in Gold Dollars closed today at G$177.46 (8.585 oz) while Dow in Silver Ounces is 549.64. In yankee dollar terms the Dow ground down 86.53 today to close at 10,366.15. S&P500 fell 9.32 to 1,099.92. Stocks have probably peaked.

Anybody who thinks that today's decline in SILVER and GOLD PRICES was caused by US Dollar strength can't add. Dollar index rose by a hole 15 basis points to 74.82, up a magnificent 0.19%. THIS was not what moved silver & gold prices.

US Dollar still refuses to commit itself to a higher or lower course. Must close above 76.50 to prove it is rallying, but remains trapped below 74.90 resistance which once upon atime was support.

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.