Tuesday, September 07, 2010

Silver and Gold Prices Have Plenty of Room to Move Up

Gold Price Close Today : 1257.30
Change : 8.20 or 0.7%

Silver Price Close Today : 19.883
Change : (0.030) cents or -0.2%

Platinum Price Close Today : 1558.00
Change : 22.00 or 1.4%

Palladium Price Close Today : 522.00
Change : 2.00 or 0.4%

Gold Silver Ratio Today : 63.23
Change : 0.507 or 0.8%

Dow Industrial : 10,340.69
Change : -107.24 or -1.0%

US Dollar Index : 82.82
Change : 0.762 or 0.9%

Bogus, thy name is today's SILVER and GOLD PRICE markets.

On the open the SILVER PRICE burst upward from $19.834 to $19.99 and traded sideways till 11 a.m., when it fell off to $19.69. At that point somebody could no longer hold the basketball underwater, and the silver price shot up to $19.90. Comex close came at $19.883, down 3.2c from Friday. Right. Sure. The silver price falls 3.2c on the same day the gold price rises $8.20 to a new all time high. Right. Paint that tape, boys! Paint that tape!

Of course, it might not have been the Nice Government Men and their scabrous Wall Street running dogs. It might have merely been speculators taking an obvious short position where the silver price has failed several times before.

All day Monday and into today's New York open the GOLD PRICE flatlined. It opened at $1,248.65 and auf einmal shot directly to $1,259.45, leaving an exhaustion gap at $1,256. Gold then traded sideways, filled that gap and dropped to $1,254.5. Then it rolled up again, closing Comex at $1,257.30, up $8.20. Yes, that is a new all-time high close , above the last one at $1,255.80 on 25 June 2010.

Is that it? Is it over? Is that all there is?

Hardly. All the indicators I follow show silver and gold prices with plenty of room to move up against their moving averages. Gold's RSI is high, and its MACD about where it was last June, but still rising. Silver is more overbought on its RSI, but has plenty of room to rise a little more. I don't think this rally will end until silver tops its 2008 high at 2068c. However, a close below 1950c and $1,240 would change my mind.

Whoa! I almost forgot the gold silver ratio. That chart shows the ratio falling out of that longstanding even-sided triangle straight down like drool off a baby's lower lip. Previous low I want to see exceeded for confirmation is 62.57, and low Friday was 62.72, 63.23 today. We must see that confirmation first, but that ratio moves fast when it moves, and this looks like one of those moves. That, too, argues that silver and gold prices have further to rise, especially silver.

Yesterday while US markets were closed the dollar fell to a new low for the move at 81.90. Overnight the dollar gapped up. Then today the dollar steadily rose, 76.2 basis points, a sizeable climb. Now it's trading at 82.816. That turns the dollar around temporarily. It has closed above its 50 dma (82.68) but must now best the last high at 83.56 and move higher still. Jury remains out on the dollar's direction, but 't'ain't leaning upside.
Somebody pulled the plug on STOCKS today. Friday the Dow reached its 200 DMA (10,450), which has stopped so many earlier rallies. Today came the hangover, down 107.24 to 10,340.69 (S&P500 dropped 12.67 to 1,091.84). Stocks fell from the open and stayed flat all day until 3:00 pm., when they fell a little mo. A close below 50 DMA (10,270) will accelerate the fall.

We held the Bodacious Hoedown on Saturday, and the weather was perfect, high about 80. Big hit with the crowd was the Dunking Booth, where they got to dunk the Moneychanger, namely, me. After about 100 balls thrown, my own grandson finally tripped the target. Hard to imagine how cold that water was. We had a pork barbecue supper with all the trimmings, then the Old Time band warmed up and the dance caller chimed in. Worn out as I was, I still had to dance. Floor was crowded with every age from 2 to 63.

We had a few, only a few, Bodacious Hoedown tee shirts left over. These are sea-foam green with a Top of the World logo and Bodacious Hoedown 2010 on the left front chest, while Hoedown is defined on the back. You can see pictures of the shirt and the hoedown at http://southernhospitalityblog.com/old-fashioned-family-fun-a-hoe-down-in-tn/. We will ship them to you by priority mail for $20 postpaid. If you want more than one, then $15 each plus $5/order postage. Email me at with your size, your name and address and phone number and I'll let you know if we have one in that size. First come, first served.

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.