Thursday, January 07, 2010

A Time Will Come to SELL Silver and Gold - Not for a Number of Years Yet

Gold Price Close Today : 1133.10
Change: 2.80 or -0.2%

Silver Price Close Today : 18.333
Change: 17 cents or 0.9%

Platinum Price Close Today: 1556.00
Change:-1.30 or -0.1%

Palladium Price Close Today: 426.00
Change: -2.55 or -0.6%

Gold Silver Ratio Today: 61.81
Change: -0.733 or -1.2%

Dow Industrial: 10,606.86
Change: 33.18 or 0.3%

US Dollar Index: 77.97
Change: 0.48 or 0.6%

Clearly my brain yesterday was under the influence of returning back to work and standing under a tsunami. Yes, yes, I do know that Joan of Arc drove the English and not the French out of France, otherwise the French today would be eating the same mushy "bangers & mash" as the English & playing rugby, neither of which any Frenchman worth his Gauloises would do.

Let's look closer at markets. Yesterday I outlined for y'all the broad range for gold, $1,254 to $1,075. A break above that range confirms the rally has re-ignited, while a close below brings lower prices. Same range for silver lies between 2003 cents and 1672 cents. Now more details.

On 20 December the US DOLLAR INDEX hit its intraday high for this move at 78.45. Then it fainted & corrected to 77.25 & its 20 day moving average. Now, like Freddie Kruger, the dollar waketh again. Today it rose 47.8 basis points to 77.971, the doorstep of 78. Right now the dollar is overbought, but if it penetrates 78 tomorrow it will drive higher, probably to the 200 DMA (79.05) in the next few days. Target for the present rally is just shy of 80, but if severely overdosed by the Nice Government Men with manipulative steroids, dollar might reach 82. The dollar, like all national central bank currencies, is a walking dead man. Get out of all investments that promise to pay you dollars in the future. They are guaranteed losers.

STOCKS have edged to new highs, but not high enough to mean much. Dow might work sideways & higher for another month, might even hit 11,000, and the S&P500 might hit 1200+. However, in real (silver & gold) terms and most likely in nominal (US dollar) terms, stocks remain imprisoned in a primary downtrend (bear market). For another five or more years stocks will post only losses. After reality bites again in 2010 -- more state and local governments hit the budget wall and rotten assets in the banks begin to stink -- optimism will fade and stocks will swoon. Stay away.

A lady called me today after she had been rebuked by her acquaintances and friends because had been buying silver and gold since late last spring. They were horrified. I thought she had a lot of courage, but they were horrified. It's hard to buck everybody's opinion, even when you know you are right -- otherwise the world would be peopled with Athanasiuses and it ain't.

What struck me hardest, tho, is that so many people and especially those in the investment business have not a clue about the primary trend's importance. They just don't understand that you must align your investment with those 15 - 20 year trends or inevitably lose. Thus they heard about the great bull market in stocks 1982 - 2000, & some may even have (wrongly) convinced themselves they were investing geniuses because they climbed aboard that bull market in time. Or maybe it was the real estate bubble they rode. Now they can't believe their cash cow has died and won't rise again for 15 or 20 years, so they alibi for every new disaster and cling to the hope that it will come back. Yes, it will, but too late to do them any good.

If y'all don't learn one other thing from this natcherl-born Tennessee fool, learn this: always invest with the primary trend. In every other direction lies sure disaster, and bulls and bears waiting to gobble up your capital.

Remember, too, that also means that a time will come to SELL silver and gold. Not for a number of years yet, but it will come, and then you MUST sell.

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.