Monday, January 24, 2011

Silver and Gold Price Correction Continues, Ultimate Peak of Bull Market Still Years Away

Gold Price Close Today : 1344.50
Change : 3.50 or 0.3%

Silver Price Close Today : 27.416
Change : (0.098) cents or -0.4%

Gold Silver Ratio Today : 49.04
Change : 0.302 or 0.6%

Silver Gold Ratio Today : 0.02039
Change : -0.000126 or -0.6%

Platinum Price Close Today : 1811.20
Change : -15.30 or -0.8%

Palladium Price Close Today : 812.70
Change : -5.35 or -0.7%

S&P 500 : 1,290.84
Change : 7.49 or 0.6%

Dow In GOLD$ : $184.20
Change : $ 1.21 or 0.7%

Dow in GOLD oz : 8.911
Change : 0.059 or 0.7%

Dow in SILVER oz : 436.99
Change : 3.98 or 0.9%

Dow Industrial : 11,980.52
Change : 108.68 or 0.9%

US Dollar Index : 78..033
Change : -0.200

The GOLD PRICE and SILVER PRICE are confused. After the long fall last week, gold bounced at least a little today, up 3.50 by Comex close to end at $1,344.50. Silver, though, pulled in the opposite direction, dropping 9.8c to finish its day on Comex at 2731.8c.

'Twas the aftermarket that unsettled me. Gold dropped $11 and silver 40c after Comex closed. That speaketh not strength in my ear.

In my little mind, at least, it's clear that gold is targeting $1,330 before this correction ends. Beyond that, the 200 day moving average comes in about $1,277, while one of my correction targets generated by ratio history is $1280. Yet suspicion begins to build in my mind that the GOLD PRICE might well cut short this reaction.

Peeking below that 2700c line did not leave the SILVER PRICE looking resolute. It fell to 2731.8c at Comex close, but that further drop afterward hurt, and leave the next target at 2650c.

The unexpected right now would be for silver and gold to turn round and rally to new highs. This is NOT what I expect after studying behavior after earlier GOLD/SILVER RATIO lows, but because that last move up was so lethargic, it remains a possibility.

We keep on getting calls from people inquiring whether they ought to sell their silver and gold now to protect their profits. Answer? Not unless you want to see all your pioneering work of the last 10 years go up in smoke while you watch silver and gold correct for a short time, then blast out of sight.

Y'all must understand that you NEVER sell a bull market position, no matter how "certain" you are that the market will correct and you will be able to buy back lower. You never make the big money in trading, but in getting right and WAITING. Ultimate peak of this bull market lies three to ten (3 to 10) years away. Hold on. Wait.

People with suspicious minds -- me -- would wonder if there were any connection between Bernard O'Bama's State of the Onion address tomorrow and a new high for the move in the Dow today. Am I hinting that the Nice Government Men, who (we all know) are above reproach, would manipulate the stock market or the economy for base political reasons? Yes, I suppose I am, since they've been doing that for the last 77 years or longer. Anyway, twas an eye-catching coincidence.

Dow Jones Industrials moved further into the green zone of Over-bought-ness on the RSI today. Dow rose a large 108.68 to close at 11,980.52. S&P500, not quite as optimistic, rose 7.49 (the S&P's rise ought to be about equal to the Dow if you multiply it by 10). Dow is as overbought as gold was back in October or Silver in early November. Behold, friends! No market, not even stocks bloated by the NGM, is immune to gravity forever, except under that school of technical analysis dominated by the Brothers Grimm.

Face the facts: the US DOLLAR makes it difficult for anyone to befriend it. Dollar index today closed down 19.6 basis points (0.25%) and made a new low for the move at 77.81. Barely held on above 78, and won't hold on there tomorrow unless something changes.

Of course, currency exchange rates are all manipulated ultimately and reveal policy decisions. Seems that Bernanke and Bernard have taken a decision to let the dollar seek its natural level. Or maybe the market is doing that work for them, based on their promises of generous inflation to depreciate the dollar. Either way, the dollar index has passed almost all support areas and appears to be headed for 76.70 or even 75.60.

Seems the currency markets don't expect much from the State of the Onion address. Yen fell 0.3% today and euro rose 0.38%.

Since Friday my wife Susan's heart has been racing. Cardiologist today said it is atrial flutter, and tomorrow Susan will undergo a procedure to try to right her heartbeat. I would be deeply grateful for your prayers on her behalf, that this procedure would succeed in regulating her heartbeat.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
Phone: (888) 218-9226 or (931) 766-6066

© 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.