Monday, February 01, 2010

Silver and Gold Prices Have Turned Up, So Stop Waiting To Buy.

Gold Price Close Today :1104.30
Change: 21.30 or 2.0%

Silver Price Close Today : 16.653
Change: 47.0 cents or 2.9%

Platinum Price Close Today: 1550.10
Change: 48.80 or 3.3%

Palladium Price Close Today: 430.80
Change: 12.55 or 3.0%

Gold Silver Ratio Today: 66.31
Change: -0.610 or -0.9%

Dow Industrial: 10,185.53
Change: 118.20 or 1.2%

US Dollar Index: 79.19
Change: -0.20 or -0.2%

Friday I may not have made myself perfectly clear. I am always perfectly clear to me, but my wife says sometimes not to others. I was trying to admit how difficult it is to act and buy when a falling market hits your target while also pointing out that the GOLD PRICE had hit our downside target and made a double bottom at $1175. So it was time to swallow our fear and buy.

Also I wrote that confirmation of that bottom would come with a gold price close above $1,100 and a SILVER PRICE close about $16.80. Today gold closed much higher, up $21.30 to close on Comex at $1,104.30. Silver rose to $16.653, up 47c. So, gold unequivocally hit and breached our target, but silver not quite -- close enough for horseshoes, grenades, and rally confirmation, however. Silver and gold prices have turned up, so stop waiting to buy.

But wait! Why did the silver price fall further than gold last week? That is, why didn't it stop at its previous $16.80 bottom? 'Twould be explanation enough to say silver is more volatile than gold, period. It also might be an explanation to say that the Nice Government Men wanted to trash gold at its weakest last week, breaking it at $1075, and as always found it easier and cheaper to trash the much smaller silver market-- knowing that gold investors always keep one eye peeled on silver as a warning of future gold moves. But in speculating, I digress.

Bob the Technical Genius called today and opined that gold's pivotal test now awaits at $1,162. Either it clears that, or busts his Elliot Wave interpretation into tiny wavelets and drops washing gold far lower. Ignorant as I am, it interests me that $1,162 coincidentally was the January high and therefore also lateral support.

Don't be surprised if gold has to put up an ear-bitin', eye-gougin' fight tomorrow at $1,104 resistance. It will, and above that stands more fighting at $1,120, $1,132, and $1,140+. Tomorrow silver needs to close above $16.80. In fact, $17.00 would be even better.

Surprises, surprises, always surprises. That's life with markets, or any other human endeavor.

The US DOLLAR INDEX's five day chart looks like a rounding top, not a continuation. Could the dollar's rally stop here, drop again? Of course, but it ought to edge a little closer to that 81.50 target from the flag on its chart. If the dollar does fall then it betrays even worse weakness than I suspected. But remember: ALL (no exceptions whatever) currency exchange rates are manipulated by their governments and central banks in the short run, so every currency is a rattlesnake, ready to sink its fangs into your plans. Dollar index ought to rise still longer, but a close below 76.80 means it will pay another visit to 74.25.

The Dow Jones Industrials rose today, not so much on the US dollar's weakness as on exhausting downward momentum. In other words, the selling pendulum swung too far toward oversold, so it swung back the other way. It would have done that on news of the dollar dropping or on news of US tiddlywinks team potting a nurdled wink and upsetting the odd-on favorite UK team. Fullness of time was in the market, not in outside events. Stay away from stocks!

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.