Tuesday, October 26, 2010

While the Dollar Rose Lustily Today, the Gold Price Was Not Disturbed, and Silver Positively Rioted

Gold Price Close Today : 1338.00
Change : (0.30) or 0.0%

Silver Price Close Today : 23.824
Change : 0.280 cents or 1.2%

Gold Silver Ratio Today : 56.16
Change : -0.681 or -1.2%

Silver Gold Ratio Today : 0.01781
Change : 0.000213 or 1.2%

Platinum Price Close Today : 1700.00
Change : 0.00 or 0.0%

Palladium Price Close Today : 629.05
Change : 19.80 or 3.2%

S&P 500 : 1,185.64
Change : 0.02 or 0.0%

Dow In GOLD$ : $172.57
Change : $ 0.14 or 0.1%

Dow in GOLD oz : 8.348
Change : 0.007 or 0.1%

Dow in SILVER oz : 472.38
Change : 3.72 or 0.8%

Dow Industrial : 11,169.40
Change : 5.41 or 0.0%

US Dollar Index : 77.71
Change : 0.605 or 0.8%

The SILVER PRICE and the GOLD PRICE have me bracing for another leg down, but I am always a little late to catch on and a little leery after a peak. The 5-day chart looks healthy enough and might have completed its decline, but the six month chart is calling for another leg down. gold is standing on its 20 DMA at $1,341.43, but well above its 50 DMA at $1,290.48. Today gold made a slightly lower low than yesterday's, falling to $1,328 about 9:30 then climbing briskly to $1,342 and backing off to trade sideways the rest of the day. Comex closed a bewildering $1,338.00, down a piddling 30 cents.

SILVER also made a lower low today at 2317c, but popped up off that low like a basketball held under water. When Comex closed silver had risen 28c to 2382.4c, and it rose further in the aftermarket, to 2420c.

On its six month chart silver is squatting above its 20 DMA (2323c), and hints at one more down leg, perhaps something fit to terrorize everyone for a day.

Merciful heavens! I'm tired of breaking my head with this, because six months from now 'twill appear a small and risible worry. Why? Because silver and gold are in a primary uptrend, and whatever little jiggles they make today, in six months they will most likely be higher.

The DOW and S&P500 today looked plumb silly. Nice Government Men, you ought to be ashamed of yourselves! Y'all can make a better show than that! The Dow spent the entire day down, as low as 11,087, then in the last few minutes of trading rose to -- get this -- plus 5.41 at 11,169.40. S&P500 was even sillier, rising an infinitesimal 0.02 to 1,185.64. Stocks will break soon, and when they do you do not want to be riding them.

The US DOLLAR INDEX decided to make good on its threat and rise after all. It climbed today 60.5 basis points (0.78%) crashing through 77.40 resistance and 77.65 resistance. That looks like a confirmed double bottom at 76.85 (Thursday) and 76.70 (Monday), with a rise up off the bottom to a new high. Dollar also cleared its 20 DMA at 77.56 and is ready to chase the 50 DMA, now at 80.14.

But carefully observe that while the dollar rose lustily today, the GOLD PRICE was not disturbed, and SILVER positively rioted.

Also I say this because over the years I have watched investors make mistakes. Two of the biggest mistakes arise from not understanding what a bull market (primary trend) does: it makes prices rise generally, and often unexpectedly, and always against opposition that tells you the bull market is about to end. So investors make two mistakes: they delay buying, waiting for the bottom of a correction. When the correction comes, their greed seduces them to wait just a little longer and sure enough, the market runs away from them before they can ever make up their minds to buy. The other mistake is worse, to try to sell the highs and buy back the lows. Nobody can successfully do that more than a couple of times a decade, and worse, that strategy negates the benefit of a bull market. Worst of all, sooner or later you will sell a peak that turns out NOT to be a peak, you lose your position, and the market runs away from you.

Then what is the wisest strategy for a bull market? Get right, and stay right; get long, and stay long; get long, and get longer. Buy and hold for the ultimate peak, not for the chiselling in-betweens.

Oh, yes, there's one more secret: sell at the peak. Don't fall in love with your bull market investment, because everything has its time and season, and its end. And NEVER confuse a bull market with investing genius.

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.