Friday, December 18, 2009

Weakness Next Week Could Take the Gold Price to $1,085 - $1,088 or even $1,070 That Would Mark the Low for the Correction

Gold Price Close Today : 1,110.80
Gold Price Close 11-Dec :1,119.40
Change: -8.60 or -0.8%

Silver Price Close Today : 17.30
Silver Price Close 11-Dec : 17.084
Change: 22.10 cents or 1.3%

Platinum Price Close Today: 1,429.20
Platinum Price Close 11-Dec : 1,431.00
Change: -1.80 or -0.1%

Palladium Price Close Today: 364.25
Palladium Price Close 11-Dec: 359.60
Change: 4.65 or 1.3%

Gold Silver Ratio Today: 64.19
Gold Silver Ratio 11-Dec: 65.52
Change: -1.33 or -2.0%

Dow Industrial: 10328.89
Dow Industrial 11-Dec: 10471.5
Change: -142.61 or -1.4%

US Dollar Index: 77.733
US Dollar Index 11-Dec: 76.551
Change: 1.18 or 1.5%

The week doesn't lie, as they say. Now there's a heap of blowing out of both sides of the mouth, but there's no lie. 'Tis up to us to hear what it's saying.

First let's talk about my least favorite subject, the scrofulous US Dollar. As I suspected, its rally hath begun, but 'tain't much. Took it forever to get above 77.50, but now it has & so confirmed that it is rallying. Target is 79.50 or even 83 with a strong tailwind & maybe another world-wide liquidity crisis. But I expect this rally to show itself short-lived and shallow, and here's why: silver & gold are not signaling, or on schedule for, a huge correction, & a gargantuan dollar rally would send silver & gold down sharply. So stay out of the dollar's way for a while, 'cause it's climbing higher.

STOCKS remain range-bound with the Dow between 10,500 and 10,250. Still looks to me like the Dow is rolling over to the downside, but between now & year end it might spike as high as 11,000, meaning nothing more than a cap on this rally. Continue to ignore Wall Street's siren song. Stay away from stocks.

Did y'all notice that gold did NOT follow through on yesterday's fall? On Comex it closed at $1,110.80, up $4. That argues that gold may have bottomed, but then, this is Friday & because people are closing out positions on Friday & taking profits for the week, sometimes Friday's close is a little distorted. I was expecting the low to hit this week, and it probably did yesterday. However, weakness next week could take gold to $1,085 - $1,088 or even $1,070. That would mark the low for the correction.

Now some of y'all might have wrongly concluded that I am a blind perma-bull for silver & gold, & that's why I keep looking for a bottom, & y'all would be dead wrong. But when you're in a bull market, your interpretative bias ought to be with the bull. There's no reason to forecast that the current correction will be other than short and shallow. To come to that silver & gold would have to smash through some really stringy, tough resistance, & they haven't.

Perma-bull? Not me. There is a time for all things. With investing there is a time to buy, & a time to sell. Never forget it, because that is the most common mistake investors make: they can't sell.

Now look at silver, sweet silver. On Comex today it rose 12.5 cents to 1730.5. Silver's low so far came last week at 1708.4. On the downside silver might drop to 1680. If silver & gold drop farther, it will happen early next week. Do not wait for further lows if you see gold close above $1,132 or silver above 1770c. Go ahead & buy, because those closes will confirm that the metals have turned around.

Right now I half believe we have seen the lows. Whether so or they come next week, metals will then trade sideways to higher & take off after 1 January. So whether we touch those lows I've listed above, or close above the breakouts above, I would buy my silver or gold before year end.

Speaking of year-end, let me give y'all our publishing schedule. I will disappear on Christmas Eve, 24 December, & not return until Epiphany, January 6. Not only will I be celebrating the Twelve Days of Christmas, but my youngest son Zachariah will be getting married out in Washington State on New Year's Eve. So the whole mob of us will be trooping out there. I promise y'all I will kick up my heels in Seattle, even if they won't be able to understand a word I say. Zach is the next to the last of our seven children to get married, & a celebration is in order.

Y'all enjoy your weekend!

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.