Thursday, February 04, 2010

The GOLD PRICE Plummeted a Monstrous $49 to Close at $1,062.40 on Comex

Gold Price Close Today : 1062.40
Change: -49 or -4.4%

Silver Price Close Today : 15.343
Change: -96.7 cents or -5.9%

Platinum Price Close Today: 1502.0
Change: -74.00 or -4.7%

Palladium Price Close Today: 411.85
Change: -25.65 or -5.9%

Gold Silver Ratio Today: 69.24
Change: 1.101 or 1.6%

Dow Industrial: 10,026.52
Change: -244.03 or -2.4%

US Dollar Index: 79.92
Change: 0.55 or 0.7%

If I have to be wrong, I'd rather be spectacularly wrong, as I was today, than to do things half-way.

Apparently overnight the Euro was hammered over worries the currency might break up from fiscal mismanagement in the southern countries. That drove the US dollar up 55 basis points to 79.921 right now, and that sudden rise laid a sword on silver and gold prices.

SILVER dropped through 16.00 support and didn't stop until it hit 15.30. Comex silver closed down 96.7c at 15.343. The 200 day moving average, a frequent target in bull market downside corrections, is 15.82, so silver has exceeded that target.

DOW dropped 244.03 today to close at 10,026.52, barely holding above 10,000. S&P500 dropped even more percentage-wise (nearly 3%) to 1,065.81, down 30.99. Worth noting is the Dow in Gold Dollars at G$195.09 (9.437 oz) not much changed. That demonstrates that stocks and gold have been dropping in lock step.

Scariest thing is the Gold/Silver Ratio, which has risen to 69.24. It might stop here, but also might rise to 72.

The GOLD PRICE plummeted a monstrous $49 to close at $1,062.40 on Comex. That price marks the support of about $1,065 from the October highs.

Okay, where are we now? An airline pilot friend of mine once told me that flying a plane was hours of boredom punctuated by seconds of sheer terror. So, too, are markets. If silver & gold do not pull out of this dive, then gold will drop to $1,000 or $970, silver to 1500c to 1450c. Two interpretations are possible:

1. Gold today made the very last leg of its correction from 2 Dec 2009, stopping at 1,065 support, and will go sideways or rally from here.

2. Gold today broke $1,085-$1,075 support and will drop much further in an extended correction.

I will cautiously stand by No. 1, but want to see that confirmed by gold not making any lower closes plus gaining a little ground in the next few days. The US DOLLAR INDEX's breakout today above 79.50 clearly states that the dollar is headed higher, maybe as high at 81.50. That certainly won't help silver and gold, but it isn't by itself fatal, either.

For the bold & brave, today's lows offer another buy signal, if you can cinch up your courage and do it. Can you?

Before any of y'all go opening a vein over the metals' drop today, stop and reflect. You didn't mind crowing when silver & gold rose, so don't balk at eating a little crow when they fall. Remember the great H.L. Hunt's line, "Never get really elated in victory; when times are tough, never get down." That advice was enough to help him make several hundred million dollars.

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.