Monday, February 22, 2010

Unless Gold Closes Below $1,100 Look for Higher Silver and Gold Prices.

Gold Price Close Today : 1,112.60
Gold Price Close 12th February: 1,089.50
Change: 23.10 or 2.1%

Silver Price Close Today : 16.222
Silver Price Close 12th February: 15.449
Change 77.30 cents or 5.0%

Platinum Price Close Today: 1,525.50
Platinum Price Close 12th February: 1,516.00
Change: 9.50 or 0.6%

Palladium Price Close Today: 440.50
Palladium Price Close 12th February: 422.40
Change: 18.10 or 4.3%

Gold Silver Ratio Today: 68.59
Gold Silver Ratio 12th February: 70.52
Change: -1.94 or -2.7%

Dow Industrial: 10,383.31
Dow Industrial 12th February: 10,099.14
Change: 284.17 or 2.8%

US Dollar Index: 80.536
US Dollar Index 12th February: 80.220
Change: 0.32 or 0.4%

Strange, strange, strange. The GOLD PRICE was pounded today but the US dollar remained basically motionless.

Friday the US Dollar index rose to a high of 81.20 but closed at 80.59. Nothing deterred, SILVER and GOLD PRICES both rose strongly (the gold price rose $3.30 to $1,121.30, above $1,120 and the silver price rose 35.3c to $16.413). Today the US Dollar Index rose 1.3 meager basis points but the gold price dropped $8.70. Clearly, we must search some place other than the dollar to find the cause of gold's drop.

A writer named Paco Ahlgren noted on yesterday that the Fed's interest rate hike last Thursday actually drove gold and stocks up on Friday, rather than down. That's the way the gold price behaves when investors are worried more about currency depreciation (inflation) than earning interest. Very good point. Yet today the gold price dropped, even after closing above $1,120 resistance on Friday (nominally, at least). Ergo, let us cast about for another cause for gold's sickliness today. Can anybody spell Nice Government Men?

The Federal Reserve is in a trap, and all talk of reversing Fed policy is nothing more than propaganda to combat inflation fears. Raise interest rates? Remove the trillions of dollars injected into the money supply in 2008? Get serious, Ben! If they shrink the money supply or raise rates they choke off economic recovery in the midst of the worst depression in eight decades. Right, sure, they're likely to do that.

After posting a double bottom at $1,100 during Thursday trading the gold price took off upside. Here might be a non- manipulatory explanation for today's action. Gold appears to have completed the first leg up of a move off $1,100 and today has been correcting that rise. If that's wrong, then gold could break $1,100. If I'm correct, gold will rise tomorrow and break through $1,120 by Wednesday. Today gold closed down $8.70 at $1,112.60.

Last Thursday the SILVER PRICE double-bottomed around $15.70, and like gold took off skyward. Before the New York market opened today the silver price rose to $16.65. Then in NY silver sawed back and forth downward to a low today of $16.14. At Comex close silver was down 19.1c to $16.222.

Unless the gold price closes below $1,100 look for higher silver and gold prices. May not be fast, but will be higher. I continue to believe that we saw the lows on 5 February.

The Dow Jones Industrial Average spent most of today in negative ground, rising above unchanged only vainly and briefly. Dow closed down 19.04 at 10,383.31. S&P500
followed down 1.16 at 1,108.01. Friday most likely marked the top of this rally. Big plunge coming. Stay away.

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.