Monday, November 08, 2010

The Gold Price Revolting Against ALL Fiat Currencies, Not Only Against The Declining US Dollar

Gold Price Close Today : 1402.80
Change : 5.50 or 0.4%

Silver Price Close Today : 27.428
Change : 0.684 cents or 2.6%

Gold Silver Ratio Today : 51.14
Change : -1.102 or -2.1%

Silver Gold Ratio Today : 0.01955
Change : 0.000413 or 2.2%

Platinum Price Close Today : 1772.00
Change : 4.50 or 0.3%

Palladium Price Close Today : 712.00
Change : 27.55 or 4.0%

S&P 500 : 1,223.25
Change : -2.60 or -0.2%

Dow In GOLD$ : $168.09
Change : $ (1.20) or -0.7%

Dow in GOLD oz : 8.131
Change : -0.058 or -0.7%

Dow in SILVER oz : 411.35
Change : -5.99 or -1.4%

Dow Industrial : 11,406.84
Change : -37.24 or -0.3%

US Dollar Index : 77.03
Change : 0.588 or 0.8%

The GOLD PRICE and the SILVER PRICE are rising not only on dollar terms, but also in yen and euros, therefore it cannot be the US dollar decline alone that is driving metals, but a revulsion against ALL fiat currencies. Finally, the US dollar rose today, about 3/4 of 1%, yet silver and gold climbed madly.

Now here's the question everybody has to answer: Is it a bubble, or a bull market? A hint: Bull markets always climb a wall of worry. Bull markets (primary up trends) run 15 - 20 years. The silver and gold bull market began in 2001; 2010 less 2001 equals nine years, not fifteen years.

Let's be clear: SILVER is way, way overbought. The RSI is at 81.04, and anything above 70 is overbought. Yet the MACD indicator, overextended as it is, shows a clear uptrend, a determined uptrend. Just as silver shot through the 2500s in one day, today it cleared half of the 2700s. The Comex close came at 2742.8c, up 68.4c but in the aftermarket silver kept on shooting up to its present 2773c. Brace yourself: I believe it will go even higher tomorrow. Today at 9:00 when I came in silver was 2675c. At 11:00 it reached 2720c, and by 1:00 2760c.

Y'all remember that I said there was no resistance on the chart (looking back at 1980 and 1981) between 2500c and 3400c, and then between there and 3950c. What you saw today is what happens to a market on fire when no resistance stands in its way.

GOLD/SILVER RATIO today fell nearabout to 51. I am trying to get time to study its progress to decide whether we ought to move our swap target down from 47.50.

The GOLD PRICE behaved almost as spectacularly as silver. On Comex it gained only 5.50 to close at $1,402.80, but that tells a truncated story. In the aftermarket gold is now trading at $1,409.60. Higher prices are coming still.

Tomorrow will inform us what to expect of silver and gold against a more persistently rising dollar. Clearly, though, the Federal Reserve and the Obama regime have taken the monumentally stupid (and ideologically Keynesian) decision to try to rescue the US economy by devaluing the dollar, maybe by 25% in six months. Remember that Roosevelt devalued the dollar from $20.6718/oz to $35/oz by 41%, but he did that over the course of a year. Then the economy REALLY tanked, and the stock market plunge of 1937-38 was even worse than the 1929 crash. Ahhh, but the builders of this Maginot line still believe that what failed in the 1930s will work today, if we only do MORE of it.

The US DOLLAR INDEX today scratched and scrabbled over 77, stuffing its pockets with 58.8 basis points to the present 77.032. The 5l-day chart clearly demonstrates that the US dollar made at least an interim bottom at 75.65 on Thursday. Climbing above 76.90 resistance and closing above 77 are the first confirmation of a dollar rally. There's more about this, too: the Euro has been falling since that island pop I pointed out last Thursday. Euro gapped down both Thursday and today, closing below the 20 DMA, first sign of a trend change. Yen appears to be rolling over, too, tugged by gravity.

All these argue that the US dollar has turned up, at least for a short time.

STOCKS spent the whole day underwater and no mystery buyers flew in at the last moment to pull them up. Dow lost 37.24 to end at 11,406.84. S&P lost 2.60 to 1,223.25. Stay out of stocks. Don't buy them, don't short them. It's a rattlesnake market locked in a bear trend.

And on this day in 1967 silver hit an all-time record high of $1.951 an ounce in London.

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.