Tuesday, October 05, 2010

Gold and Silver Prices Will Shortly Move Sharply Higher After Any Shallow Retracement

Gold Price Close Today : 1338.90
Change : 23.50 or 1.8%

Silver Price Close Today : 22.714
Change : 0.701 cents or 3.2%

Gold Silver Ratio Today : 58.95
Change : -0.810 or -1.4%

Silver Gold Ratio Today : 0.01696
Change : 0.000230 or 1.4%

Platinum Price Close Today : 1698.90
Change : 33.60 or 2.0%

Palladium Price Close Today : 578.60
Change : 17.84 or 3.2%

S&P 500 : 1,160.75
Change : 23.72 or 2.1%

Dow In GOLD$ : $168.98
Change : $ 0.04 or 0.0%

Dow in GOLD oz : 8.174
Change : 0.002 or 0.0%

Dow in SILVER oz : 477.94
Change : 4.46 or 0.9%

Dow Industrial : 10,944.72
Change : 193.45 or 1.8%

US Dollar Index : 77.81
Change : -0.636 or -0.8%

My last night's suspicions about GOLD and SILVER PRICES were proved true today. They converted tiny losses yesterday into huge jumps today. The GOLD PRICE vaulted $23.50 to close Comex at $1,338.90. The SILVER PRICE strapped on a jet pack and shot up 70.1c to $22.714. In the aftermarket they're trading at $1,341 and $22.90.

Where will they at least pause to take a rest? The silver price could reach $24.50, the gold price $1375, maybe more, but as I keep harping, both will shortly move sharply higher after any shallow retracement.

Here's something to leave you sleepless tonight. Go to http://banktracker.msnbc.msn.com/banks/. Click on your state on the map, and you can access the balance sheet of any bank in your state It will show you the "troubled asset ratio", that is the ratio of bad loans divided by the bank's capital and loan loss reserves. Bad loans include "Loans more than 90 days past due", "non-accruing loans" and "Other real estate owned" (foreclosures). National median is 15.00, i.e., 15%. A graph displays where your bank's troubled asset ratio stands in relation to the national median. If your bank's TRA stands above the national median, better think about a new bank.

Here's some icing for that poisoned cake. How many MORE loans are on the banks' books that, because of the Financial Standards Accounting Board's cowardice, are carried at far above their true value because they no longer need be marked to market?

And how about some poison ice cream for that cake? Jim Sinclair of Mineset reports that Landesbank Baden-Wuerttemberg has sued Goldman Sachs over its $37 million loss on Collateralized Debt Obligations (CDOs). Underlying this is an Ohio case a number of months ago in which Deutsche Bank tried to foreclose on mortgages held in mortgage backed securities. Because they had no originating documents to prove the property had actually been mortgaged, the court threw out their suit. Seems that when folks like Goldman Sachs were aggregating those junk mortgages to securitize them as CDOs or MBSs, they neglected to be finicky about the paperwork and cannot prove the mortgage. No proof, no foreclosure, no right.

German has a phrase for a conceited or foolish person who runs his mouth about how great he is: Er spinnt. He spins, like a spider, mere cobwebs in the air. Lo, and behold! The entire financial system is mere cobwebs, spun out of the greed and imagination of a bunch of rotten spiders.

TODAY'S trading brings back to mind that forecast I made many months ago that gold was targeting $1,375. Looney as that seemed at the time, today gold price stands a bare $35 under that. Whooo! Something we are not seeing is very, very wrong in the world to send the Realizers scurrying into silver and gold. Also, as my friend, The West's Greatest Wholesaler, mentioned this evening, Democrats are doing bright stuff like suggesting a 1% transaction tax on savings accounts, or regulating silver and gold dealers. All this adds up to Lurching, rudderless lurching in the face of true and grave perils. No leader or junior leader has brains enough or guts enough to lead. Instead, they all lurch from side to side as the ship sinks. But let me leave that distasteful subject.

The US DOLLAR today sought oblivion again, dropping 63.6 basis points (0.82%) to 77.811. Rest assured that at this rate it won't take the buck long to chew through the 77s and 76s on its way to 74. Euro's little dip yesterday only filled the gap left on Friday, and the Euro rose again today at 1.3836. Still watch the NGM. Might engineer a sudden dollar rally to catch the market flatfooted.

STOCKS benefitted, too, from the flight out of the dollar. Dow rose 193.45 points (1.8%) to 10,944.72. Dollar fears boosted the S&P500 23.72 to 1,160.75. Mark, however, that these gains could not offset the larger gains by silver and gold. The Dow in Gold Dollars (DiG$) has broken below its G$170 (8.224 oz) support to close today at G$168.72 (8.162 oz). The Dow in Silver Ounces (DiSoz) has plunged to new lows at 477.94 oz, 14 ounces below the old low. Leave stocks to the Spiders.

Last night I watched the first genuinely engaging movie I've seen in a long time, Temple Grandin. It's a story about an autistic girl who figures out cows by doing what the rest of us are too clever to do: watch the cows. It was a superb and satisfying movie. And it will teach you something about herding cows.

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.