Tuesday, September 21, 2010

Higher, Yes, and Higher Still Will Silver and Gold Prices Trade

Gold Price Close Today : 1272.40
Change : (6.60) or -0.5%

Silver Price Close Today : 20.620
Change : (0.157) cents or -0.8%

Platinum Price Close Today : 1622.30
Change : -9.00 or -0.6%

Palladium Price Close Today : 534.30
Change : 0.50 or 0.1%

Gold Silver Ratio Today : 61.71
Change : 0.149 or 0.2%

Dow Industrial : 10,761.03
Change : 7.41 or 0.1%

US Dollar Index : 80.41
Change : -0.928 or -1.1%

One of the most telling market indicators is public sentiment. It becomes most outrageously over-optimistic at tops and most pessimistic at bottoms. Humans extend the present into the future forever, forgetting that we live in a world where only the only unchanging principle is that everything is always changing.

Thus yesterday I pointed out to you that long-time silver and gold holders were selling, which points away from a top, because the public is usually wrong at peaks. That means they would be buying more instead of selling if this were a long-term peak. Likewise, the mumbling moil of analysts and commentators proclaiming gold and silver are peaking furnishes yet another evidence they are nowhere near that climax. At the bull market top you won't be able to find a bear with a telescope and a Geiger counter.

Yet these clues are subtle, and easily lend themselves to misinterpretation, even for experts.

TODAY the Federal Reserve did for the GOLD PRICE what gold could not do for itself, namely, announced more "Quantative Easing", a.k.a., inflation at will. Wisely enough the Fed-ites waited until after the Comex gold market had closed to make their announcement. Gold jumped from $1,272 to $1,291 faster than you can say "Stumbling-into-hyperinflation." After all's said and done, after all the Nice Government Men's manipulations, gold's best friend remains the US Federal Reserve and the US government.

Today from the $1,279 open the gold price had sunk to Thursday-Friday's low about $1,272.00. Comex closed $1,272.40, down 6.60. Then came the Fed's announcement and the gold price climbed onto the elevator. Right now it's trading at $1,286.90, which is one more new high.

The SILVER PRICE made what I believe is a new intraday high today at $21.07. For most of the New York trading day it fell to $20.48, then the Fed boosted the price and the silver price hit that new high. That was after Comex has closed down 15.7c at $20.62. Now at $20.98.

Appears to me that SILVER and GOLD PRICES did a little corrective double-take today, shook off the weakness, and roared ahead. I'd be surprised if they didn't follow through tomorrow with much higher prices. RSI and MACD are screaming "Overbought!" but what do silver and gold care? Nothing. Y'all are getting the faintest foretaste of the frenzied, foaming- at-the-mouth trading that is to come. Higher, yes, and higher still will silver and gold trade.

Needless to say, the dollar plunged upon the Fed's announcement, breaking through that 80.85 last low all the way to 80.20. That nixes any chance of a dollar rally any time soon, and if it breaks 80, the dollar's fate -- and a trip back to 70 -- is sealed.

HOWEVER, I would like to see whether the Euro can cross above its 200 DMA tomorrow and stay there. After all, the euro is just as trashy as the dollar. As of right now, dollar index is 80.412, down a meaty 92.8 basis points. Wow. Ben and his Busy Boys sure know how to manage a currency, don't they?

STOCKS tried hard today to best yesterday's high, rising all the way to Dow 10,833. Alas! 'Twas not to be. Dow managed to hang on to only 7.41 points of that gain and closed at 10,761.03. SUP500 closed DOWN 2.93 at 1,139.78. Stocks' reaction to the Fed's announcement (all the big gain came after the news) examples how markets often react opposite to the rational. How stock buyers could rationalize that a severely-inflated dollar would help the poor, battered US economy beats me, but apparently they did. They're just as ignorantly wrong-headed as Bernanke and Co.

I must travel tomorrow, Thursday, and Friday, so this is the last commentary I will send this week. God willing, I will return on Monday.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2010, 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.