Tuesday, September 28, 2010

Silver and Gold Prices Stand Now Far Below their Ultimate Gains for this Move

Gold Price Close Today : 1306.60
Change : 9.90 or 0.8%

Silver Price Close Today : 21.688
Change : 0.233 cents or 1.1%

Platinum Price Close Today : 1635.00
Change : 2.70 or 0.2%

Palladium Price Close Today : 561.75
Change : 500.64 or 819.2%

Gold Silver Ratio Today : 60.25
Change : -0.193 or -0.3%

Dow Industrial : 10,858.14
Change : 46.10 or 0.4%

US Dollar Index : 78.95
Change : -0.387 or -0.5%

The last few days I have sounded awfully negative on silver and gold prices, trying to impress y'all's minds with the snap volatility of markets climbing in strong advances. Today, let my pendulum swing back the other way.

This rally is not over yet, by a long shot. Sure, it will get a shallow correction somewhere, but silver and gold stand now far below their ultimate gains for this move.

Think about the DiG$'s behaviour since its 26 August low at G$167.09 (8.053 oz). It drifted up to G$175.04 (8.467 oz) by 20 September, and has ranged from there to G$170.29 (8.238oz). That sort of lock- step with gold suggests that along with gold, the Dow is merely discounting the US dollar's fall, and not much more. Gold in Euros confirms that suspicion, since it has gently rolled over from the first of September, from E993 to E964 today. Euro gold has returned to its 50 day moving average, which loudly whispers that its little downward move has ended and that it is about to rise again. If that happens while the dollar is falling, dollar gold will speed up, not slow down.

Although this rally is not over yet, the past two weeks' trading take your breath away. Since 7 September, out of the last 16 trading days, gold has made nine (9) new all-time highs. Every day of the last five, including today, gold has made a new all time high.

Silver has made new all time highs since 2008's 2068.5c. On 16 September it finally broke that 30 month barrier by closing at 2074.5c. Since then silver has chalked up seven new highs over nine trading days, including today's 2168.8c, a dollar above 2008. Yet the advances are steady, not with giant leaps but with inexorable determination.

The gold/silver ratio keeps on dropping, too. It has dropped past last spring's low at 62.577 and today stands at 60.250, a new low for the move. At 58.531 it clears the bottom of the triangle. It is dropping straight down, like your car keys out of your shirt pocket into the wishing well at Disneyworld. It is behaving exactly as it should if silver and gold intend to rally much further.
The Dow in Silver Ounces (DiSoz) vergeth also upon breakdown. Today at 500.65 ounces to buy the Dow, it is just about to break 500 and the old low at 492.54 ounces.

This rally is far from over.

TODAY the US Dollar Index followed Fate and dropped 38.7 basis points, 1/2%, to trade now at 78.951. That's a new low for the move, and must draw the inference that the dollar has its eyes set on 74 or lower.

STOCKS today gained, but not to any effect. Dow added 46.1 to 10,858.14 and S&P rose 5.54 to 1,147.70. As I said, stocks are merely discounting the dollar's drop, but soon will realize that more than a withering dollar is needed for stocks to gain value. A viable economy is needed, too. Stay away from stocks.

GOLD broke the $1,300 barrier, climbing $9.90 on Comex to close at $1,306.60. Silver gained 23.3c and closed on Comex at 2168.8. High today was 2175c, and it's trading now at 2174c, while gold is trading at $1,308.20.

On this day in 1850 the US Navy abolished flogging as a form of punishment, replacing it with tickling the sole of the foot with a large pelican feather.

On this day in 1678 Pilgrim's Progress was published, one of the most widely read Christian books in the world, then and now.

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.