Friday, January 08, 2010

I Had Rather Buy on Weakness Next Week Than Buy Here

Gold Price Close Today : 1133.10
Gold Price Close 31st Dec: 1,095.20
Change: 43.00 or 3.9%

Silver Price Close Today : 18.333
Silver Price Close 31st Dec: 16.822
Change: 163.60 cents or 9.7%

Platinum Price Close Today: 1,576.50
Platinum Price Close 31st Dec: 1,468.00
Change: 108.50 or 7.4%

Palladium Price Close Today: 428.65
Palladium Price Close 31st Dec: 410.00
Change: 18.65 or 4.5%

Gold Silver Ratio Today: 61.66
Gold Silver Ratio Close 31st Dec: 65.11
Change: -3.44 or -5.3%

Dow Industrial: 10,617.29
Dow Close 31st Dec: 10,428.05
Change: 189.24 or 1.8%

US Dollar Index: 77.461
US Dollar Index Close 31st Dec: 77.860
Change: -0.40 or -0.5%

Y'all don't misplace this commentary, because it contains the closes for the year 2009. Look in Column B above. In a bare week the silver price has jumped 163.6 cents or 9.7% -- not bad. The gold price meanwhile gained $43.00 for a 3.9% rise. Obviously a few optimists and metals bulls came back from vacation expecting great things, and bought accordingly. Are they out of the woods yet?

The gold price needs to climb above $1,140.00 as a first step. Both silver and gold prices have climbed above their 20 day moving averages, another upward first step. The silver price is running ahead of the gold price and has crossed above 18.08, the level analogous to gold's $1,140. A close above 19.00 implies that silver has no more downside coming, and a close above 20.05 confirms that.

The US Dollar is acting most odd. Yesterday it jumped up 45 basis points, today it dropped the same. I know I am liable to be painted an ignorant hick for saying it, but why does that price action smell of Nice Government Men and their Manipulating Muscle? Technically it makes the dollar look spent, worn out, unable to clear the hurdle at 78. Logically the dollar's rally shouldn't end yet, but what does logic have to do with markets? They move to the logic of forces we cannot see. Anyhow, every other day the dollar leaves its future in doubt. What else can you call it but scrofulous? Get out of all assets that promise to pay dollars in the future, unless you enjoy watching your capital vanish.

STOCKS inched their way to another new high today. The Dow closed at 10,617.29, up 10.43 while the S&P500 rose 3.01 to 1,144.70. Stocks will probably continue to rally through January, reaching maybe 11,000 Dow and 1,200 S&P500, but after that they fall off the cliff. Stay out of stocks.

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

Today metals resolved their confusion by both rising. At Comex close gold had risen to $1,138.20, up 5.10, and silver closed at 18.458, up 12.5 cents.

Our care has to be that this is the Up-wave (B) of an A-B-C down-up-down correction, so I had rather buy on weakness next week than buy here. If gold pierces $1,140 it will run for $1,200 at least. Silver is already running for the last high at 19.45.

Weird -- the Gold/Silver Ratio weakened off right on schedule, making a sudden low (62.5) exactly on the 105 day cycle 31 December. Since then, though, it has fallen to 61.66 today, a harbinger of good things to come for gold and silver -- soon.

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.