Friday, October 15, 2010

Silver and Gold Have Shown Terrifying Strength Lately

Gold Price Close Today : 1,371.10
Gold Price Close 8-Oct : 1,344.20
Change : 26.90 or 2.0%

Silver Price Close Today : 2427.2
Silver Price Close 8-Oct : 2308.7
Change : 118.50 or 5.1%

Gold Silver Ratio Today : 56.49
Gold Silver Ratio 8-Oct : 58.22
Change : -1.73 or -3.0%

Silver Gold Ratio : 0.01770
Silver Gold Ratio 8-Oct : 0.01718
Change : 0.00053 or 3.1%

Dow in Gold Dollars : $ 166.79
Dow in Gold Dollars 8-Oct : $ 169.26
Change : $ (2.47) or -1.5%

Dow in Gold Ounces : 8.068
Dow in Gold Ounces 8-Oct : 8.188
Change : -0.12 or -1.5%

Dow in Silver Ounces : 455.78
Dow in Silver Ounces 8-Oct : 476.74
Change : -20.96 or -4.4%

Dow Industrial : 11,062.63
Dow Industrial 8-Oct : 11,006.48
Change : 56.15 or 0.5%

S&P 500 : 1,176.20
S&P 500 8-Oct : 1,154.15
Change : 22.05 or 1.9%

US Dollar Index : 77.019
US Dollar Index 8-Oct : 77.178
Change : -0.16 or -0.2%

Platinum Price Close Today : 1,699.00
Platinum Price Close 8-Oct : 1,701.30
Change : -2.30 or -0.1%

Palladium Price Close Today : 592.00
Palladium Price Close 8-Oct : 486.90
Change : 105.10 or 21.6%

Goodness gracious! Look at that silver! It gained 118.5 cents in one week. 23.7 cents a day. That leaves even me, the Head Bug of All Silver Bugs, staggered. It gained 5.1% in a single week. Beside that, gold's 2%, $26.90, looks measly.

I climbed down, down into the cellar, brushed through the cobwebs, blew off the dust, and pulled out my ancient silver records from 1979 - 1981. Where, I asked, were the support and resistance levels in those ancient times? Lo and Behold! about where they fall today. Coming down off the peak, gold stopped at 2253c (this week's reaction low was 2233c), and at 2436.5c (this week's high 2490c and today traded around 2425-2435c). Above this lies a squiggle at 2500c made on the way up in 1979, then 3440c on the way down in early 1980 -- not far from my 3400c target for this move. Above that lies a peak at 3956.5c. My point is twofold. First, that the old resistance/support still has some life and second, that very little trading has ever occurred at these levels, and no chart resistance stands above silver until it reaches 3440c, then 3956.5c, then 5000c.

Today the US DOLLAR INDEX jumped up for a change. It made a new low at 76.144, nearly clean through the 76.00s, leapt to 77 resistance, and closed a point thru the mark for good measure. By far 'tis too early to say that portends a rally, but it well might. If the dollar is meditating a rally, it must first clear 77.90. The trend remains down, but after so many days falling, the dollar is due for a dead cat bounce at least. That is sure to panic stock investors, and may spook silver and gold buyers, too. Be warned, stay wary.

A glance at the DOW chart says that Wednesday it peaked at 11,150, and has rolled over ever since. Today it tried to rally, reached 11,141, then fainted. Support remains at 11,000 and 10,900. If you still own stocks, even in an IRA or 401(k), get out while you have time. Dow in Silver Ounces (DiSoz) has fell to a new bear market low this week at 454.38 oz. Stocks lost nearly 21 ounces against silver this week.

SILVER and GOLD have shown terrifying strength lately. In the 29 trading days since 7 September, gold has made 15 new highs. In the last 57 trading days, gold has not once declined 1% or more.

In the 23 trading days since 14 Setpember, silver has posted new highs on 17 days.

Folks, I love this, but it ain't normal. It's begging for a correction, but I appears it won't arrive before 2500c, unless it started today. That correction should prove shallow and short so that silver will resume its ascent toward 3400c. On comex today silver dropped 14c to 2427.2c.

GOLD gave up $5.60 today to close Comex at $1,371.10. Yes, it dropped, but still won $26.90 this week. Unlike silver which hath not yet traded above its all time 5000c high, gold is moving through new territory. Who knows what will stop it? Round numbers? Distance from 200 day moving average? Superman?

The rally toward $1,600 and 3400c remain intact. Hold onto your gold and silver, buy if you haven't bought before, buy more on any correction. Our day has come. This bull market will likely last another 5 years.

The GOLD/SILVDER RATIO plummeted a colossal 1.73 points this week to close at 56.49. It should break through 56 next week. My current target to swap silver for gold is 47.50, but the target from the point and figure chart is 41, and if gold reached $1,600 and silver 3900c, the ratio would be -- 41. I'm going to study this over the next few days. Maybe we will re-adjust our target.

If you do not have an open order with us to swap at 47.50, and you want to exercise the swapping strategy, call us at (888) 218-9226. Have no clue what the swapping strategy is? Go read "Why Silver Will Outperform Gold 400%" at

Here's today's lesson in Why NOT to Buy Numismatic Coins. I keep prices for US $20 Liberty and St. Gaudens types in all grades from the Coin Dealer Newsletter. Their premiums have been trending down, down, down since 1998, except for a brief spurt in 2008. Since then they have been falling like a hammer off the top shelf on your unprotected head. I averaged all the premiums on all Liberty type and St. Gaudens type. Here's what I found:

From 13 March 2009 until 1 October 2010, the Liberty series $20 premiums dropped from 219% over gold to 147% over gold, a 33% drop. In dollars per ounce, the $20 Liberties (all grades averaged) actually fell from $1,956.89 per oz. to $1,923.32, a 2% loss.

From 13 March '09 until 1 Oct. 2010, the St. Gaudens series $20 premiums dropped from 175% over gold to 126% over gold. In dollars per oz, the St. Gaudens dropped from $1,567.30/oz to $1,646.32, a 5% gain.

What did plain old ratty gold bullion do over the same period? It rose from $895.60 to $1,306.60, a 146% increase.

I don't care what the salesmen of numismatic coins say, the charts show that they do NOT outperform bullion. In fact, over the last 1-1/2 years, they have spun their tires and gone nowhere while gold rose 146%. True, my figures above average the premium across all grades, but the picture is the same for every single grade, and the higher grades perform worse. You tell me which is the best buy: Numismatics or bullion coins?

Y'all enjoy your weekend.

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.