Monday, January 25, 2010

I am Looking for Higher Silver and Gold prices Soon - If I am Wrong, There is Quite a Bit of Air Beneath Recent Lows, So Be Warned

Gold Price Close Today : 1095.20
Change: 6.00 or 0.6%

Silver Price Close Today : 17.131
Change: 21.3 cents or 1.3%

Platinum Price Close Today: 1549.50
Change: 2.00 or 0.1%

Palladium Price Close Today: 443.25
Change: 12.35 or 2.9%

Gold Silver Ratio Today: 63.93
Change: -0.450 or -0.7%

Dow Industrial: 10,196.86
Change: 23.88 or 0.2%

US Dollar Index: 78.18
Change: -0.04 or -0.0%

The GOLD PRICE on a five day chart (, use symbol XAUUSDO) broke out above the since-last-Wednesday downtrend line on Friday, but only slightly improved today. Well, it rose $6.00 to a Comex close at $1,095.20. All of this trading could show nothing more than a dead cat bounce, so gold must prove itself by conquering the psychological round number barrier at $1,100, then technical resistance at $1,105, then $1,125 and $1,130. In other words, it has to reverse what happened as it fell. (Wondering what a "dead cat bounce" is? Well, try to dribble one sometime and you'll understand.)

The SILVER PRICE has bounced off its $16.80 December low (last Friday) but improved only 21.3 cents over Friday to close on Comex at $17.131. Smiling face of that is a higher low today at $16.95 and that 21.3 cent advance. Next resistance hovers at $17.40 and $17.80.

My overview: If the dollar fails here then silver and gold prices will resume their rally. My present interpretation reads that December high and following correction as a short term setback in an ongoing rally, not an important top. Thus I am looking for higher silver and gold prices soon. If I am wrong, there is quite a bit of air beneath recent lows, so be warned.

The US DOLLAR INDEX has declined since last Thursday's 78.80 high, and today traded right up under the downtrend line but failed to break through. Trading now down 3.5 bps at 78.175. If the dollar breaks below 77.80 again then this rally has ended for a while.

STOCKS sure enough performed a dead coat bounce today. Dow rose a gigantical 23.88 points to close at 10,196.86. S&P500 rose 5.02 (be still, my beating heart!) to 1,096.78. The Dow breaking 10,120 would break loose a waterfall.

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. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.