Thursday, September 02, 2010

I Do Not Believe the Gold Price Has Finished Here

Gold Price Close Today : 1251.50
Change : 5.20 or 0.4%

Silver Price Close Today : 19.615
Change : 0.256 cents or 1.3%

Platinum Price Close Today : 1546.00
Change : 10.00 or 0.7%

Palladium Price Close Today : 527.00
Change : 7.00 or 1.3%

Gold Silver Ratio Today : 63.80
Change : -0.575 or -0.9%

Dow Industrial : 10,320.10
Change : 50.63 or 0.5%

US Dollar Index : 82.39
Change : -0.079 or -0.1%

SILVER and GOLD PRICES blasted higher, but not quite through the old highs.

A reader chastened me for citing silver's performance in September 1979. I will take the rebuke as deserved. It was a bit over the top citing that particular instance, since that was the leading up to the blow out top in January 1980. However, I mention not in self-justification (perish the thought!) but in clarification that the silver price often or usually wallows through August and takes off into September. So the jury will please disregard, dis-remember, and dis-charge yesterday's remark, or at least reduce it by 70%.

So, much calmed down, I will talk about silver's sparkling, well-nigh eye-popping performance today. Overnight the SILVER PRICE steadily ascended from its $19.23 low to $19.50 by the New York open. At that point it leapt nearly 15c, backed off, tested that high, backed off again, and ran through it to a $19.67 high. When Comex turned off the lights the silver price had gained 25.6c to close at $19.615, its highest close since 12 May 2010 at $19.64. The silver price has pushed past its June intraday high, but not quite past the May intraday high (1981c).

Here 'tis folks, the moment of truth. The silver price either continues through this resistance and runs to new highs, or we can put on the black armbands and start crying. No, wait. This might be the top of a wave leading to a short correction not lower than $18.80. Not quite sure, but my instinct goes with higher prices tomorrow because silver was so strong today. Doesn't quite seem finished.

The GOLD PRICE high today came at $1252.88, not quite as high as yesterday's, but the Comex close was $5.20 higher at $1,251.50. No, I do not believe the gold price has finished here. This much is sure: when it passes that $1,255 last high close, nobody will want to stand in gold's way and it will run like the proverbial scalded dog. Big question remains, is this it?

The US DOLLAR drifted sideways between 82.6 and 82.3, and probably has one more leg down to 82 or 81.90. Today silver has been flirting with the 20 DMA (82.45), but without success so far. Appears to have one more little leg down left in it, probably tomorrow. Close below 81.50 forecloses chance of rally and turns dollar down.

Stocks. Hard for me stirring myself up to care, but here goes. Stocks oscillated over unchanged today from up a little to down a little until about 2:00, when they embarked on all the day's gain, 50.63 points to close the Dow at 10,320.10. S&P lagged along, rising 9,.81 to 1,090.10.
I was reading Dr. McHugh last night and he noted that this sort of sharp volatility in both directions was also seen before the big break in 1987. See Point is, these big lurches from up to down show confusion and weakness, not strength.

For a long time I've been warning about government trial balloons about forcing IRA and 401(k) holders to take an annuity backed by government bonds at maturity rather than a lump sum payment. My friend Pat Heller has published an article about it at and you can find comments on it at
I strongly recommend you read it. Note that no laws have been passed yet, but read Pat Heller's most insightful speculations about how this would play out. I believe he nails it.

I wouldn't live anywhere in the world but right here on the Top of the World Farm. This morning my son Justin pulled out of the smoker some salted ham steaks he had been smoking for two days. Imagine the deepest burgundy red, and you'll have the colour of the meat, but Oh! The taste. It can't be described.

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.