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Gold Price Close Today : 742.40
Change: 37.50 or 5.3%
Silver Price Close Today : 9.490
Change: 69 cents or 7.8%
Gold Silver Ratio: 78.23
Change: -1.873 or -2.3%
Dow Industrials: 8,497.31
Change: -337.94 or -3.8%
US Dollar Index Today: 87.42
Change: 0.74 or 0.9%
Imagine that you loaned someone $50,000 to invest in a gold mine in Sierra Leone . Now imagine that he calls you after a month & tells you he spent
$25,000 on the gold mine, but then changed his mind. He now thinks that's a
bad idea, so he's going to invest in a hog farm in Iran.
You would probably get busy rummaging through your bureau for your .357
magnum to go eliminate this problem, but you can't do that when the
incompetent who borrowed the money turns out to be secretary of the US treasury, & the loaner is congress, & the dough amounts to $700 billion.
So, now, tell me: how much faith do y'all have that the government & the
Fed know what they're doing? Or that they are likely to find a quick
"cure" for the economic crisis? Pondering how Paulson has been
handing out money to his bank buddies, one wonders whether he's merely
attempting to look incompetent while in fact looting the treasury for his
friends.
But let that pass & let's think about markets this week. We got an object
lesson in why a "key reversal" consists of TWO parts. First, there
is the break into new low territory with a higher close for the day. Second,
that must be confirmed by a higher close the next day.
Stocks didn't make the second step. Yesterday they traded to a new low for
the move, then closed sharply higher. However, the profit takers didn't trust
that gain to hang around until Monday, so sold like rip today, down 338 to
8,497.31 on the Dow.
If stocks drop again Monday, then the pain has not ended.
The US Dollar Index rose today, 74 basis points to 87.42, on no news or some
news, I can't tell. Who knows what's moving it nowadays. My goal for the
scrofulous currency is about 90, and then reality will set in.
Tomorrow the heads of state & finance ministers of the Gang of 20 will
meet in Washington to re-arrange the "international financial
architecture" to bless all of us peons. O, thank you, Massa, thank you!
Watch out. Something really bad could be spawned there.
SILVER and GOLD shone this week. What? Y'all ask? The silver price
dropped 47 cents this week. Means nothing. The gold prie rose $9.20 for the
week to close at 742.40. The silver price closed at $9.49. More important,
however, is the key reversal put in yesterday and today with today's higher
close. This is a very reliable sign of a bottom, that can only be
contradicted by a lower close. The gloom is off the rose for metals, so you
can buy with much greater confidence now.
Long term outlook remains unchanged: much lower for stocks & the dollar,
much higher for silver & gold. Look through the fog to the horizon. Steer
straight.
Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.
Franklin Sanders
www.the-moneychanger.com
Reprinted with permission from The Moneychanger.
Franklin Sanders lives on a farm in Middle Tennessee by choice, deals in
physical gold & silver, and has been writing and publishing The
Moneychanger for nearly 26 years. In 1993 he wrote Silver Bonanza for Jim
Blanchard. Last year he published "Why Silver Will Outperform Gold 400%
and & The Professional Trading Secrets That Will Make the Most of Your
Silver & Gold Investments," still available at www.the-moneychanger.com/order/publications.phtml.
You can sign up for Mr. Sanders' free daily e-mail
commentary on gold & silver at www.the-moneychanger.com, and download your free
portfolio calculator to keep up with your gold and silver investments.
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