Tuesday, January 25, 2011

Silver and Gold Price Correction Continues, How Long Will it Last?

Gold Price Close Today : 1332.30
Change : (12.20) or -0.9%

Silver Price Close Today : 26.811
Change : (0.507) cents or -1.9%

Gold Silver Ratio Today : 49.69
Change : 0.476 or 1.0%

Silver Gold Ratio Today : 0.02012
Change : -0.000194 or -1.0%

Platinum Price Close Today : 1783.20
Change : -28.00 or -1.5%

Palladium Price Close Today : 782.75
Change : -29.95 or -3.7%

S&P 500 : 1,291.18
Change : 0.34 or 0.0%

Dow In GOLD$ : $185.84
Change : $1.65 or 0.9%

Dow in GOLD oz : 8.990
Change : 0.080 or 0.9%

Dow in SILVER oz : 446.73
Change : -0.04 or 0.0%

Dow Industrial : 11,977.19
Change : -3.33 or 0.0%

US Dollar Index : 78.00
Change : -0.003 or 0.0%

Returned with Susan from Nashville & am pleased to report with hearty thanks to God that she came through the procedure quite well and they shocked her atrial flutter into submission. Thank you for your kind prayers. Some of y'all thought she was having an ablation, but she wasn't. They did a trans-esophageal echocardiogram, where they stick an ultrasonic probe down your throat to make sure you have no clots in the atria of your heart. Then they shock the heart to stun the atria out of their fast, irregular rhythm. Don't try this at home.

The GOLD PRICE fell as low as $1,322.70, well past my $1,330 target but not as low as my $1,315 target. However, gold closed Comex at 1,332.30, down only $12.20, not, as earlier, $20.00. This is constructive, but not dispositive, as those prone to substitute adjectives for verbs say. Or, as we might say in Tennessee, it looks better but is still a mite green around the gills. This might be a good shelf to launch at least a small upward reaction from, or it might just keep on plunging. I don't believe gold has finished correcting yet.

SILVER PRICE today reached my first correction target at 2650c. Remember that my targets are based on what silver has done after earlier ratio lows in the last 10 years, so they have a lot of play in them. Based on that history, 2650c would be the smallest possible correction.

On Comex silver lost 50.7c to close at 2681.1. That 2650c mark formed firm resistance today & silver rounded down to that & up off it, which may form a basis for some sort of rally. After all, it has spent the last five days falling, so some sort of bounce is about due.

Worst signs today for metals were the hard falls in platinum and palladium. Platinum fell 1-1/2% & palladium, which last year was the star performer with an 89% gain, lost 3.8%. Both grey metals had been holding up until today. Their break hints at more downside for silver & gold.

When you see a red sunset you aren't surprised when it clouds up and rains the next day, but those clouds don't mean it will rain forever. So when y'all saw that high peak in SILVER & GOLD and low in the GOLD/SILVER RATIO on 3 January, you had to expect that a season of correction would come. Be patient & calmly await the outcome. Shouldn't be more than another 60 days at most.

US DOLLAR INDEX was surprisingly active today on a day rendered uncertain by O'Bama's speech tonight -- not that he is likely to deliver any news or change his Keynesian course.

Now the dollar has tried four times to break through 77.80 and fall further, but so far without success. Today it did rally to 77.40 -- twice -- but fell all the way back to 77.80. Trading now around 78, basically unchanged in spite of all the puff & blow.

Markets very rarely make four-fold bottoms. The dollar chart might be signaling a reversal, but if so it may not break 77.80 tomorrow, & in fact, must rise. Euro has reached 1.368, which might be a good place to turn around and drop. However, main chance says the dollar falls further and euro keeps rising.

The Dow had an 80 point range today, & closed down 3.33 to 11,977.19. S&P500 closed up 0.34 at 1,291.18. Other indices were mixed, some up, some down, but none by much. Stock market is waiting to see what sort of fiddle Mr. O'Bama plays, & hoping the little leprechaun has some lucky charms.

For stocks, this is as good as it gets, with all the Wall Street gurus waxing economically sanguine & breathlessly awaiting what tricks the Leprechaun will pull out of his green derby. Alas! Often the expectation outshines the fulfilment, & disappointment follows. In that derby, I fear, are only marshmallows & stars & moonbeams, but no magic tricks & surely no pot o' gold.

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.