Tuesday, February 09, 2010

I Am Buying Gold at These Prices. It will Look Like a Bargain a Year From Now

Gold Price Close Today : 1076.70
Change: 11.00 or 1.0%

Silver Price Close Today : 15.431
Change: 35.3 cents or 2.3%

Platinum Price Close Today: 1503.10
Change: 26.50 or 1.8%

Palladium Price Close Today: 419.50
Change: 10.30 or 2.5%

Gold Silver Ratio Today: 69.78
Change: -0.904 or -1.3%

Dow Industrial: 10,058.64
Change: 150.25 or 1.5%

US Dollar Index: 79.79
Change: -0.51 or -0.6%

Wondering why the markets today felt like a bimetallic thermostat in the hands of kids withblowtorches and dry ice? First a "senior source in the German ruling coalition" whispered to Reuters that an agreement in principle had been reached within the EU on bailing out Greece. Then a German government spokesman announced later that that rumor was unfounded. Still, the US dollar took a big hit and the Euro (known to me affectionately as the "Lame-o") stayed high for its best gain since November.

Beloved readers, the adults have all exited the building and left the teenagers and loonies in charge.

Ponder for a moment the Gold/Silver Ratio. It has risen to resistance above 70, not quite to 72.50. It catches my eye because in 2008 I did not pay close enough attention to a similar development. The Ratio broke through its downtrend line, but never rose, it just traded sideways. Then it rose straight up from 55 or so to 84. Two outcomes are possible: either the ratio fails here and turns down in earnest, or it keeps on rising. Turning down implies a silver and gold rally this spring with the SILVER PRICE far outperforming the GOLD PRICE. Rising implies another financial crisis like Fall 2008's, with gold outperforming silver. Since I cannot read the future -- at least not clearly or consistently -- I don't know yet which way it will break. I am beginning to suspect, however, that the problem with the PIGS (Portugal, Ireland, Greece, Spain) may be worse even than the 2008 problems with the US banks.

Either way, calm your hearts. Yes, you are witnessing the end of the 350 year epoch of central banking, and yes, it will be filled with turmoil, but something much better will grow on the ruins. Meanwhile, you had better get hold of real and not paper value. That means an unfailing revenue stream (your own business or a very safe job), silver or gold, a way to feed yourself (real food), against the backdrop of a genuine community.

There's no easy way to climb out of a slimy pit.

The GOLD PRICE today reached and climbed above support/resistance at 1,075 to close at $1,076.70 (up $11). This is good, yes, positive, but only steps along the right road and not reaching the goal, which is closing above $1,120. Personally, I am buying gold at these prices. It will look like a bargain a year from now.

The SILVER PRICE rose 35.3c today to close on Comex at $15.431. This, too, is good. Low today was $15.12 and high was $15.58, so although it bounced off $15.50 report it closed toward the high end of that range.

A lot of damage has been done to silver and gold prices by the recent plunges. It takes time to repair those wounds. Be patient, and keep on acquiring at lows.

US DOLLAR INDEX right now is trading at 79.79, down 51.2 basis points from yesterday, a big lick. Chart might be telling us that the advance has ended and dollar will plunge back to support at 74, or it may merely be correcting a completed upmove. A close below 78 supports the downward plunge interpretation. Otherwise, a trend in force remains in force until broken.

The Dow Industrials rose again above 10,000 today to close at 10,058.64, up 150.25 points. S&P500 rose 13.78 to 1,070.52. What else could the Nice Government Men do after the Dow fell through 10,000 yesterday? Bogusity, bogusity, all is bogusity.

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.