Saturday, October 02, 2010

Resistance Has Cleared for Silver and Gold Prices

Gold Price Close Today : 1,316.10
Gold Price Close 24-Sep : 1,296.00
Change : 20.10 or 1.6%

Silver Price Close Today : 2203.7
Silver Price Close 24-Sep : 2138.3
Change : 65.40 or 3.1%

Platinum Price Close Today : 1,676.30
Platinum Price Close 24-Sep : 1,641.50
Change : 34.80 or 2.1%

Palladium Price Close Today : 570.70
Palladium Price Close 24-Sep : 559.70
Change : 11.00 or 2.0%

Gold Silver Ratio Today : 59.72
Gold Silver Ratio 24-Sep : 60.61
Change : -0.89 or -1.5%

Dow Industrial : 10,829.68
Dow Industrial 24-Sep : 10,860.26
Change : -30.58 or -0.3%

US Dollar Index : 78.034
US Dollar Index 24-Sep : 79.282
Change : -1.25 or -1.6%

Look at the week, and Lo! The numbers speak for themselves. The SILVER PRICE rose an astonishing 3.1%, the gold price rose 1.6%, while the US dollar index fell 1.6%. Stocks dropped marginally, but that means they didn't rise. When the ball game ends, nobody cares what plays came close to working. All that counts is the score on the board. Game ends at the end of the week.

Far as it might stretch your credulity, the silver price on the weekly chart has not reached plumb overbought. The RSI is high, but not over the line, and the MACD has room to climb. Daily chart is another matter, with the longest run of overbought RSI in the past 3 years, and MACD high, but not as high as previous peaks. I watch silver's distance from its 200 DMA, and a day or so ago that was 120%. That's high, but at extreme peaks it may reach 145%.
Yea, a correction will come sometime, but perhaps not before silver reaches 2450c, and then only a shallow one. Today silver closed above 2200c at 2203.7c on Comex, adding 23.9c. Other folks can sit on the sidelines, but I am buying more. Silver is marching, so don't get trampled standing in its way.

The GOLD PRICE racked in another $8.30 today to finish at $1,316.10 on Comex. That clears resistance for both silver and gold.

Forecasts from here are tricky, because silver and gold prices have never trod this ground before. $1,325 and $1,375 are both targets for a little interim correction, but thereafter both metals are eyeballing much higher prices by January, February, or March 2011.

The US dollar failed to fulfil even my meager expectations of a rally and plunged yet another 68.6 basis points (0.88%) today to 78.034. Once it fell through 80, the dollar needed only six days to fall clean through 79 to 78, 200 bps. The Euro gapped up today, which, considering it hath since this upmove began in September already made a breakaway gap and another runaway gap, I must interpret as an exhaustion gap. After that sort of gap, markets often make an island top, trading sideways a few days, then gap down out of it. Of course, the dollar could also keep on dropping, although there is some support at 78. Surely the buck is overdue for a rally, especially against the Euro. Mark also the bad news out of Ireland yesterday. Irish government debt reaches 32% of GDP, thanks to bailing out the banks. But what ho, serfs! What's the reason governments exist, if notto serve and save the banks? The contrary reaction of the Euro today, rising on bad news, may signal exhaustion for the euro, the market's initial but wrong reaction. Be that as it may, the dollar still will reach 74, maybe lower, whether it rallies between now and then or not.

STOCKS, I emphasize, ended the week lower. Dow closed up a feckless 41.63 points this day to 10,829.68 and S&P rose 5.04 at 1,146.24. Yet the only accurate means to gauge stocks' performance is not raw dollar performance, which in any event the Nice Government Men jimmy often and vigorously to maintain the illusion of the Potemkin Recovery. Rather, let us measure stocks by real money, by silver and gold and attend what they say.

They say stocks are bombing. The Dow in Gold Dollars stands at the bottom of its G$175 - G$170 range where for a month it has stagnated. Today it closed G$170.10 (8.229 oz), bumping the bottom of the range and begging to fall through and continue lurching earthward. Dow in Silver Ounces (DiSoz) closed today at 491.43 oz, a new low. These lows fall within already established and famished down moves. Who needs a prophet to outline where these are headed?

Meanwhile, folks sit back with their arms folded while the dollar melts to slime. Lies the whole world beneath some evil spell? What evil witch of Narnia has frozen them into paralysis? Today 20 Krugerrands that 9 years ago sold for US$10,000 sell for $27,200. What are people waiting for? For 20 Krugerrands to sell for $50,000? Will they buy then, convinced at last that gold is in a bull market? Silver bags I begged to sell for $3,575 now fetch $16,200.

Friends, the problems no longer loom, the problems have arrived. What will the economy and the dollar look like 12 months hence? Or, perhaps you have confidence that Ben and Bama's Keynesian nostrums will work, and that they can print the dollar into strength and the economy into recovery? Stub out that joint, brother!

Forget all that and get to work in your local economy. Help revive it buy buying locally-grown, healthy food. Patronize local merchants and craftsmen. Think locally, act locally, as Wendell Berry says. Stop waiting on the incompetent government to save you: save yourselves! They are the past -- you are the future.

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.