Wednesday, October 13, 2010

Silver and Gold Repeated Their Tactic of the Last Few Weeks, Dropping One Day and Leaping the Next

Gold Price Close Today : 1369.50
Change : 24.00 or 1.8%

Silver Price Close Today : 23.920
Change : 0.785 cents or 3.4%

Gold Silver Ratio Today : 57.25
Change : -0.905 or -1.6%

Silver Gold Ratio Today : 0.01747
Change : 0.000272 or 1.6%

Platinum Price Close Today : 1710.00
Change : 30.00 or 1.8%

Palladium Price Close Today : 597.00
Change : 9.00 or 1.5%

S&P 500 : 1,178.12
Change : 8.35 or 0.7%

Dow In GOLD$ : $167.49
Change : $ (1.81) or -1.1%

Dow in GOLD oz : 8.102
Change : -0.087 or -1.1%

Dow in SILVER oz : 462.34
Change : 1.47 or 0.3%

Dow Industrial : 11,096.16
Change : 75.76 or 0.7%

US Dollar Index : 77.09
Change : -0.276 or -0.4%

My, oh, my! How my heart rejoices that I am not the poor slug charged with maintaining the dollar's life. Over the weekend the dollar made a low at 77, and now has revisited that today. As oversold as the dollar is, that hints at a foundation for a rally, but the dollar has run that same play before during this fall, only to drop again the next day. A break through 76.90 takes the dollar to 74.

STOCKS bounced today. The Dow added 75.76 to reach 11,096.16 while the S&P500 gained 8.35 to 1,178.12. Dig with a spade, rent a back-hoe, drive tunnels into the earth and you will not be able to dig out any economic reason for stocks rising. Forget not, either, that their P/E ratios and yields are nowhere close to bear market lows. Stay away from stocks, stop your ears to the gurus.

Dow in Silver Ounces today dropped to 462.34, another new low.

Both SILVER and GOLD repeated their tactic of the last few weeks, dropping one day and leaping the next. It takes a sober man's breath away.

Gold opened $1,356.50 traded sideways an hour, then pole vaulted in two steps to $1,373.95. Afterwards it merely slid along top of its 2 hour moving average. On Comex the NGM and bears managed to contain the close below $1,370 at $1,369.50, higher by an astounding $24. Mercy. To my ignorant eyes it appears the last four days put in an A-B-C correction and today it began another upleg.

Is GOLD overbought? Yes, quite. Outside 20 Day moving average envelope. Bumping up on top Bollinger band. Williams % R at top of range and has been since first days of August.

Overbought? Yes, but it's a bull market, and it is going higher.

SILVER sprang a staggering 78.5c to close on Comex at 2391c, right, nearly 2400c. Silver opened the day slowly at 2345c. At 10:00 it began a steady upward march that reached 2385c by 1100 and 2395c by 12:30. In the aftermarket silver costs 2400c an ounce.

A couple of readers have commented that they are holding off buying because I am looking for a correction. If you think that, you have mis-read my commentaries. I have repeatedly warned not to stand in the way of this market. It is a runaway bull. I have repeatedly said that until we reach $1,600 and 3400c, corrections should be shallow.

Silver and gold are in a bull market. Only sensible strategy in a bull market is to buy, and the bull market will bail out even your timing errors.

Whoa! My daughter Liberty just shouted at me that silver has broken through 2400c to 2406c. Yes, it is wild and volatile, but that bull market will always try to shake over every rider. Keep your eyes locked on the horizon. There will be no correction until a correction happens. That could take place any time, but looking at 30 year old price action, tiny resistance (and psychological resistance) awaits at 2500c. After any correction, the price will resume rising fiercely. Risking buying right before a correction might happen is a risk of every bull market, and a fear the bull exploits to shake off as many riders as possible.

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.