Tuesday, October 11, 2011

The Silver and Gold Price Bull Market Has Not Near Ended, Lots More Time and Upside Left

Gold Price Close Today : 1669.60
Change : 35.10 or 2.1%

Silver Price Close Today : 31.944
Change : 0.986 or 3.2%

Gold Silver Ratio Today : 52.27
Change : -0.531 or -1.0%

Silver Gold Ratio Today : 0.01913
Change : 0.000192 or 1.0%

Platinum Price Close Today : 1520.70
Change : 0.40 or 0.0%

Palladium Price Close Today : 613.75
Change : 0.00 or 0.0%

S&P 500 : 1,194.89
Change : 39.43 or 3.4%

Dow In GOLD$ : $141.56
Change : $ 1.15 or 0.8%

Dow in GOLD oz : 6.848
Change : 0.056 or 0.8%

Dow in SILVER oz : 357.91
Change : -0.74 or -0.2%

Dow Industrial : 11,433.18
Change : 330.06 or 3.0%

US Dollar Index : 77.53
Change : -1.210 or -1.5%

I can't avoid pointing out that the GOLD PRICE had yet another opportunity to pierce $1,675 today, and failed for the third time. Generally, third time's the charm, and if it fails it won't come back. Gold reached its flood tide at $1,681.57, but closed down $9.90 at $1,659.70. The GOLD PRICE has taken away one more reason to expect an immediate rally.

O, and the SILVER PRICE close today! Silver rose one cent to close Comex at 3196.3, after a high of 3235c. That 3250c resistance held firm, and silver blinked. Possible it's building a flat topped rising triangle, with the flat top at 3250c, because the lows have been higher. Still, a silver dip under 3150c, not to mention 3100c, will send the SILVER PRICE tumbling again.

It's easy to misunderstand my outlook. I sound very negative on SILVER and GOLD, but that's a very short term view. I don't think the European crisis has ended, and on top of that a silver and gold correction to a 34-month rise is taking place. Yet all that will pass. And what if it drove silver and gold down another 20%? I don't care, because I am holding for the triple or quadruple we will see from that low.

No, the SILVER and GOLD bull market has not near about ended. Lots more time and upside left. Don't forget that.

Logically -- mathematically -- the price of US government bonds ought to drop when the US dollar drops. Lower dollar means investors will demand more interest to make up for the lower dollar price, and bond prices move the opposite direction to their interest rates (yields).

And as bonds have dropped, yields have risen. Maybe it's only a blip on the screen as the US dollar corrects its rally, but still it contradicts the Fed's Operation Twist that aims to lower long term rates, and the Fed's stated goal of keeping all interest rates down.

Why am I bothering with this? If ever a stampede develops out of US government debt because the public is repudiating the dollar, it will start this way, with the US government having to pay higher and higher interest to compensate for expected inflation and dollar instability. Not saying that's happening now, just that its possible.

The US DOLLAR index with a low at 77.34 today (closed 77.49, down 1.56%) right nearly touched the upper trading channel line of the channel the dollar broke out of to the upside. This classifies as that "Final Kiss Good-Bye" I mentioned yesterday. It's a move markets often make, breaking out to a new high (or low), then trading back to the same support/resistance that marked the breakout point. Now the dollar might fall a little lower, maybe to 76.75, or even to the 200 day moving average at 76, but none of those moves will gainsay the dollar's rally. Y'all will see soon the US dollar index priced in the 80s.

Euro traded sideways, closed 1.36456, up -- get out your electron microscope -- 0.03%. The Japanese yen continues to torture its Nice Government Men and exporters by remaining stubbornly high. Closed today flat, up 0.02% at 130.45c/Y100 (Y76.65/$1).

To set up the European bailout, 17 member states needed to agree unanimously. Today the last, Slovakia (population 5,429,763, fewer than Tennessee) voted AGAINST the bailout. The Germans have a word, "Schadenfreude" that means "gloating at someone's fall." Right now, I am fighting Schadenfreude over the eurocrats failure to bail out the banks. Probably, I am not fighting it hard enough. Good chance of that. Yep.

Stocks today bounced off that bottom line of the Jaws of Death top I mentioned yesterday. Dow fell 16.88 (0.15%) to a 11,416.30 close. S&P flattened, up 0.65 [sic] to 1,195.54.

I may not like stocks (and I don't, no more'n y'all like a copperhead snake) but I try to tear off the top of the chart and read faithfully what it says. They may rally, but I don't want any part of them. First off, that little rally shouldn't carry too far, according to overbought/oversold indicators. But let's say stocks go wild and shoot their biggest bolt and reach for that 200 dma way in the sky above at 11,968.90 -- what then? Still don't amount to a hill of beans, and they're in a bear market to boot.

On the other hand, stocks are a fine candidate to fail right here and fall more.

Wall Street 2011 -- what 250,000 Confederate soldiers died to prevent.

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

- Franklin Sanders, The Moneychanger

© 2011, 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.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.