Saturday, February 06, 2010

The Bull Market in Silver and Gold isn't Even Near its End Yet

Gold Price Close Today : 1,052.20
Gold Price Close 29-Jan : 1,083.00
Change: -30.80 or -2.8%

Silver Price Close Today : 14.823
Silver Price Close 29-Jan : 16.183
Change: -136.00 cents or -8.4%

Platinum Price Close Today: 1,481.50
Platinum Price Close 29-Jan : 1,501.30
Change: -19.80 or -1.3%

Palladium Price Close Today: 400.00
Palladium Price Close 29-Jan : 418.25
Change: -18.25 or -4.4%

Gold Silver Ratio Today: 70.98
Gold Silver Ratio 29-Jan : 66.92
Change: 4.06 or 6.1%

Dow Industrial: 10,012.23
Dow Industrial 29-Jan : 10,067.33
Change: -55.10 or -0.5%

US Dollar Index: 80.383
US Dollar Index 29-Jan : 79.482
Change: 0.90 or 1.1%

'Twas a day that brought Rembrandt, Reubens, Picasso, & other Nice Gvoernment Men eager to paint the tape.

Tell me not that the Dow Jones Industrial Average all by itself and with no help from the NGM on the Plunge Protection Team traded under 10,000 all day long, as low at 9,835, yet only decided to rise exactly at the close and ended at 10,012.24, up 10.05. (S&P closed up 3.09 at 1,066.20). Now I may have hayseeds falling off my shoulders, but I didn't fall off a turnip truck yesterday. Some artiste painted that tape. Stay out of stocks. Yes, I mark and understand that with the Dow in Gold Dollars at roughly G$195 (9.433 oz) shouts that gold has dropped just as much as stocks. Yes, I see that, and have little explanation for stocks & metals moving together other than "flight from the dollar." Therefore, when the flight turns the other way, both drop together. They will, at last, diverge, & likely this year.

The US DOLLAR INDEX rose today 44 basis points to 80.38, which has the forces of light running for cover. Sorry as the dollar is, 'taint as sorry as the Euro or Yen. Now that Greece, Spain, & Ireland (not to mention Portugal & Italy) look ready to default on their sovereign debt, the Frankenstein Euro might blow apart at its stitched seams. Hence the investor rats pouring over the sides of the SS Euro headed for the life raft Dollar. Once the air begins to leak & hiss out of the Dollar they'll jump ship again. I expect the dollar to rally as high as 81.50, but it could exceed that. Powering it is a panic, & panics cannot be predicted.

Speaking of "painting the tape," GOLD's low today was $1,052 and on comex it closed down $10.20 at $1,052.20. End of world, right? Wrong, in the artermarket it rose as much as $18. Silver closed on Comex down 52c at 14.823, but in the aftermarket has traded up 40c or so.

Silver has taken a rougher, further fall than gold. The Ratio has broken out upside to 70+, and should reach 72. If 72 doesn't stop it, it will revisit 84, painful as that is to say.

This is the perfect low spot in the road to stop and lift up our eyes to the mountains. Maybe we can figure out where we are. We will key off of gold, since silver will follow gold.

Possibly today Gold made its low at $1,065 resistance & the $1,052 spike was just that, a spike low. Gold will prove this by climbing through resistance/support levels above, namely, $1,075, $1,085, $1,100, then $1,120.

On the other hand, we now have to reckon as more likely lower prices because gold has broken that important resistance from $1,085 - $1,065. Beneath gold lies support at $1,025 & $1,000. Strongest support is the apex of the triangle formed in 2008 at $970. Could it fall to $680? Yes. It fell proportionately that much in 1974-76 correction that lasted 20 months, then came from a $103.50 low to reach $850 at the ultimate peak, an 8.2-fold increase.

Am I just alibing? Nope, such is the path of bull markets. The bull is always trying to shake off as many riders as he can, & right now he is shaking mightily.

But wait! If you're so sure gold is going to drop that much, why not sell it now and buy back lower? No, no, no, NEVER sell your position in a bull market. NEVER. If it goes lower, buy more but never, ever sell your position in a bull market. Most of all, remember that NOBODY knows where gold's correction will stop. Quite literally, we might have seen the low today. Where would you be then if you sold your position? Chasing the market and buying gold back at a higher price.

Calm your spirits & be patient. Risk takers can buy here. Most crucial to remember is this: the bull market in silver & gold isn't even near its end yet.

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