Was Friday a Key Reversal in Stocks and Silver and Gold Prices?

Gold Price Close Today : 1065.70
Change: 13.50 or 1.3%

Silver Price Close Today : 15.078
Change: 25.5 cents or 1.7%

Platinum Price Close Today: 1476.60
Change: -4.90 or -0.3%

Palladium Price Close Today: 409.20
Change: 9.20 or 2.3%

Gold Silver Ratio Today: 70.68
Change: -0.305 or -0.4%

Dow Industrial: 9,910.59
Change: -101.64 or -1.0%

US Dollar Index: 80.30
Change: -0.08 or -0.1%


Was Friday a key reversal in stocks and SILVER and GOLD PRICES? Remember that a key reversal occurs when a market breaks to a new low for the move, but closes higher that day, then the next day rises above the previous day's close. Merely stating the definition gives us an answer, not by the Comex closes, but by the aftermarket.

The GOLD PRICE Comex close Friday was $1,052.20. The SILVER PRICE Comex close Friday was $14.823 and Today the Comex closes were $15.078 (up 25.5c) and $1,065.70 (up $13.50). Does that fulfill a Key Reversal Part 2? Not quite, because in Friday's aftermarket silver traded up to $15.20 and gold to $1,068. I can't pronounce that a completed Key Reversal, because that really would require closing on Comex today higher than Friday's aftermarket.

Here's what we know. Gold had lateral support at $1,065, and after that spike close on Comex (redolent of dead mackeral), it leapt back to that level, although it gained no ground today. Likewise, always-more volatile silver Comex-closed above $15.00, good, but mum as to future intent.

When you make trading rules for yourself, you must follow them, or be forever pingponged by emotion. We reached this support level at $1,065, and that was one of our targets to buy, for both silver and gold. Now, having done that, we wait to see whether they will confirm to the upside by rising above $15.50 and $1,085, or whether they will sink to next support at $14.50 and $1,025.

Finally, don't panic. Even markets in a primary uptrend zig and zag up and down. Go back and check your premise that led you to conclude silver and gold prices are in a primary uptrend. Have any of those drivers changed? US government stopped deficit spending? Federal Reserve stopped creating money out of thin air? Stocks escaped their primary down trend? Dollar exceeded 100 on dollar index? No, none of that has changed, and neither has the primary uptrend in silver and gold prices.

STOCKS clearly had no key reversal, because in spite of Friday's suspicious recovery late in the day, today they failed to fulfill the all-important second half of a key reversal, namely the higher second day close. Stocks today closed down 101.64 at 9,910.59. S&P500 lost 9.2 to close 1,056.99. That close below the psychologically critical 10,000 tolls the death knell for stocks. Big break is coming soon. mnnn

The US DOLLAR INDEX stopped to catch its breath today, dropping 7.8 basis points to 80.302 right now. RSI & MACD momentum indicators are waaaay overbought, signalling that a pause will arrive soon. "Soon" of course is relative, & overbought can get way overbought more. For now, the panic has bitten deep about the Euro. That will turn around, but I'm not sure when. Truth is, dollar could climb to 89.5. If it does, 'twill be a long, hard, dry year for silver and gold.

I point y'all to www.gold-eagle.com/editorials_08/willie020410.html, "Breakdown of the Gold Market" by Jim Willie. I bring this to your attention, as the lawyers say in cross examination, not for the truth of the matter asserted, but to show something else. I don't know Mr. Willie and am not familiar with his work, so cannot speak good or bad of either, but the thing speaks for itself. Whether his assertions about a shortage of physical gold are accurate or not, they will be. I have long expected that this bull market would prove the opposite of the 1970s', namely, that physical and not futures prices would drive the market. As demand explodes for holding physical silver and gold, the tiny size of supply and the shortfall will be made plain. Physicals will rise to a huge premium above futures, although many may not recognize it.

In fact, calling it a "premium to futures" clouds the issue, because in fact the market is discounting all paper silver and gold. It could also be termed a "backwardation" because the usual contango which makes futures months more expensive than metal for immediate delivery is reversed, and physicals become more expensive. Don't think it cannot happen, because it already did, in Fall 2008, when premiums on silver coin went to forty percent (40%) and gold coins to 20% and deliveries stretched out 4 - 6 weeks. That backwardation lasted from September through February 2009. Backwardation will strike again. It offers another reason to buy now, long before supply disappears, and don't be too squeamish about the price.


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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.

The Bull Market in Silver and Gold isn't Even Near its End Yet

Gold Price Close Today : 1,052.20
Gold Price Close 29-Jan : 1,083.00
Change: -30.80 or -2.8%

Silver Price Close Today : 14.823
Silver Price Close 29-Jan : 16.183
Change: -136.00 cents or -8.4%

Platinum Price Close Today: 1,481.50
Platinum Price Close 29-Jan : 1,501.30
Change: -19.80 or -1.3%

Palladium Price Close Today: 400.00
Palladium Price Close 29-Jan : 418.25
Change: -18.25 or -4.4%

Gold Silver Ratio Today: 70.98
Gold Silver Ratio 29-Jan : 66.92
Change: 4.06 or 6.1%

Dow Industrial: 10,012.23
Dow Industrial 29-Jan : 10,067.33
Change: -55.10 or -0.5%

US Dollar Index: 80.383
US Dollar Index 29-Jan : 79.482
Change: 0.90 or 1.1%

'Twas a day that brought Rembrandt, Reubens, Picasso, & other Nice Gvoernment Men eager to paint the tape.

Tell me not that the Dow Jones Industrial Average all by itself and with no help from the NGM on the Plunge Protection Team traded under 10,000 all day long, as low at 9,835, yet only decided to rise exactly at the close and ended at 10,012.24, up 10.05. (S&P closed up 3.09 at 1,066.20). Now I may have hayseeds falling off my shoulders, but I didn't fall off a turnip truck yesterday. Some artiste painted that tape. Stay out of stocks. Yes, I mark and understand that with the Dow in Gold Dollars at roughly G$195 (9.433 oz) shouts that gold has dropped just as much as stocks. Yes, I see that, and have little explanation for stocks & metals moving together other than "flight from the dollar." Therefore, when the flight turns the other way, both drop together. They will, at last, diverge, & likely this year.

The US DOLLAR INDEX rose today 44 basis points to 80.38, which has the forces of light running for cover. Sorry as the dollar is, 'taint as sorry as the Euro or Yen. Now that Greece, Spain, & Ireland (not to mention Portugal & Italy) look ready to default on their sovereign debt, the Frankenstein Euro might blow apart at its stitched seams. Hence the investor rats pouring over the sides of the SS Euro headed for the life raft Dollar. Once the air begins to leak & hiss out of the Dollar they'll jump ship again. I expect the dollar to rally as high as 81.50, but it could exceed that. Powering it is a panic, & panics cannot be predicted.

Speaking of "painting the tape," GOLD's low today was $1,052 and on comex it closed down $10.20 at $1,052.20. End of world, right? Wrong, in the artermarket it rose as much as $18. Silver closed on Comex down 52c at 14.823, but in the aftermarket has traded up 40c or so.

Silver has taken a rougher, further fall than gold. The Ratio has broken out upside to 70+, and should reach 72. If 72 doesn't stop it, it will revisit 84, painful as that is to say.

This is the perfect low spot in the road to stop and lift up our eyes to the mountains. Maybe we can figure out where we are. We will key off of gold, since silver will follow gold.

Possibly today Gold made its low at $1,065 resistance & the $1,052 spike was just that, a spike low. Gold will prove this by climbing through resistance/support levels above, namely, $1,075, $1,085, $1,100, then $1,120.

On the other hand, we now have to reckon as more likely lower prices because gold has broken that important resistance from $1,085 - $1,065. Beneath gold lies support at $1,025 & $1,000. Strongest support is the apex of the triangle formed in 2008 at $970. Could it fall to $680? Yes. It fell proportionately that much in 1974-76 correction that lasted 20 months, then came from a $103.50 low to reach $850 at the ultimate peak, an 8.2-fold increase.

Am I just alibing? Nope, such is the path of bull markets. The bull is always trying to shake off as many riders as he can, & right now he is shaking mightily.

But wait! If you're so sure gold is going to drop that much, why not sell it now and buy back lower? No, no, no, NEVER sell your position in a bull market. NEVER. If it goes lower, buy more but never, ever sell your position in a bull market. Most of all, remember that NOBODY knows where gold's correction will stop. Quite literally, we might have seen the low today. Where would you be then if you sold your position? Chasing the market and buying gold back at a higher price.

Calm your spirits & be patient. Risk takers can buy here. Most crucial to remember is this: the bull market in silver & gold isn't even near its end yet.


Y'all enjoy your weekend!


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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.

The GOLD PRICE Plummeted a Monstrous $49 to Close at $1,062.40 on Comex

Gold Price Close Today : 1062.40
Change: -49 or -4.4%

Silver Price Close Today : 15.343
Change: -96.7 cents or -5.9%

Platinum Price Close Today: 1502.0
Change: -74.00 or -4.7%

Palladium Price Close Today: 411.85
Change: -25.65 or -5.9%

Gold Silver Ratio Today: 69.24
Change: 1.101 or 1.6%

Dow Industrial: 10,026.52
Change: -244.03 or -2.4%

US Dollar Index: 79.92
Change: 0.55 or 0.7%

If I have to be wrong, I'd rather be spectacularly wrong, as I was today, than to do things half-way.

Apparently overnight the Euro was hammered over worries the currency might break up from fiscal mismanagement in the southern countries. That drove the US dollar up 55 basis points to 79.921 right now, and that sudden rise laid a sword on silver and gold prices.

SILVER dropped through 16.00 support and didn't stop until it hit 15.30. Comex silver closed down 96.7c at 15.343. The 200 day moving average, a frequent target in bull market downside corrections, is 15.82, so silver has exceeded that target.

DOW dropped 244.03 today to close at 10,026.52, barely holding above 10,000. S&P500 dropped even more percentage-wise (nearly 3%) to 1,065.81, down 30.99. Worth noting is the Dow in Gold Dollars at G$195.09 (9.437 oz) not much changed. That demonstrates that stocks and gold have been dropping in lock step.

Scariest thing is the Gold/Silver Ratio, which has risen to 69.24. It might stop here, but also might rise to 72.

The GOLD PRICE plummeted a monstrous $49 to close at $1,062.40 on Comex. That price marks the support of about $1,065 from the October highs.

Okay, where are we now? An airline pilot friend of mine once told me that flying a plane was hours of boredom punctuated by seconds of sheer terror. So, too, are markets. If silver & gold do not pull out of this dive, then gold will drop to $1,000 or $970, silver to 1500c to 1450c. Two interpretations are possible:

1. Gold today made the very last leg of its correction from 2 Dec 2009, stopping at 1,065 support, and will go sideways or rally from here.

2. Gold today broke $1,085-$1,075 support and will drop much further in an extended correction.

I will cautiously stand by No. 1, but want to see that confirmed by gold not making any lower closes plus gaining a little ground in the next few days. The US DOLLAR INDEX's breakout today above 79.50 clearly states that the dollar is headed higher, maybe as high at 81.50. That certainly won't help silver and gold, but it isn't by itself fatal, either.

For the bold & brave, today's lows offer another buy signal, if you can cinch up your courage and do it. Can you?

Before any of y'all go opening a vein over the metals' drop today, stop and reflect. You didn't mind crowing when silver & gold rose, so don't balk at eating a little crow when they fall. Remember the great H.L. Hunt's line, "Never get really elated in victory; when times are tough, never get down." That advice was enough to help him make several hundred million dollars.

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.

The Gold Price's Next Target Has Become $1,124

Gold Price Close Today : 1111.40
Change: -6.00 or -0.5%

Silver Price Close Today : 16.310
Change: -42.6 cents or -2.5%

Platinum Price Close Today: 1576.00
Change: 25.90 or 1.7%

Palladium Price Close Today: 437.75
Change: 6.95 or 1.6%

Gold Silver Ratio Today: 68.14
Change: 1.376 or 2.1%

Dow Industrial: 10,270.55
Change: -26.30 or -0.3%

US Dollar Index: 79.43
Change: 0.41 or 0.5%

Nyah, yah, SILVER and GOLD PRICES backed off a little today, but not enough to break any meaningful support.

The GOLD PRICE today traded up to $1,124.60 overnight but couldn't crack $1,118 during Comex trading and fell back to close down $6 at $1,111.40. Today did not damage gold's uptrend. On the contrary, a small correction strengthens and solidifies the rally. What would prove that conclusion wrong? A gold close below $1,100. Otherwise, gold's next target has become $1,124.

The SILVER PRICE hit $16.95 overnight, then trended down the rest of the day. Low came at $16.25 and on Comex silver closed down 42.6c at $16.31. Silver has now verified and confirmed support at $16.30, and tomorrow should rise again.

The US Dollar Index staged a sharp rally from 78.70 nearly up to Friday's 79.50+ peak. It came up so sharply that it looked like a bear market rally where short-covering drives prices. On the other hand, if the dollar follows through tomorrow with a close above 79.50, it would means the dollar will be rallying higher still.

The DOW fell slightly, down 26.3 to 10,270.55, and is still correcting that rough January fall. Look for this present up move to stop somewhere between 10,306 and 10,468, that is, normal corrections at 38.2% and 61.8% of the foregoing fall. S&P500 dropped 6.04 to 1,097.28. Pray, ignore those Wall Street sirens who keep bleating that stocks will come back. True, they will, in another 10 years or so. Meanwhile, stay away from stocks.

I think when it warms up it's worse than suffering through snow. We had an ice-storm last Friday that came with snow, but today it was 40 degrees with the air itself breathing promises that spring would come again. In my front yard I noticed daffodils pushing up. Come springtime, I am not much good for anything indoors.

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.

Buy Silver and Gold Here, or Wait Until the Gold Price Exceeds its $1,226 Top.

Gold Price Close Today : 1117.40
Change: 13.10 or 1.2%

Silver Price Close Today : 16.736
Change: 8.3 cents or 0.5%

Platinum Price Close Today: 1580.20
Change: 30.10 or 1.9%

Palladium Price Close Today: 442.95
Change: 12.55 or 2.8%

Gold Silver Ratio Today: 66.77
Change: 0.454 or 0.7%

Dow Industrial: 10,296.85
Change: 111.32 or 1.1%

US Dollar Index: 72.00
Change: -0.24 or -0.3%

That eye-gougin', ear-bitin' knuckle duster I was expecting for gold at $1,104 never came to pass. The GOLD PRICE just shot through $1,105, ran to $1,118.50, and backed off. That's perfectly respectable performance. On Comex gold closed up $13.10 at $1,117.40. Tomorrow it will attack resistance at $1,118 - $1,125, and most likely conquer it.

The SILVER PRICE just clotted on the chart under $16.80, but didn't break through. It closed up 8.3c on Comex at $16.73.6. I think it could be laziness to point the finger at the Nice Government Men every time something goes wrong, but they have habits, and have habitually been beating up silver to hold the gold price back for the last 15 years or so. What better way to cast doubt on gold's performance?

Aww, never mind. Tomorrow the silver price ought to shoot through $16.80 and close above $17.00. There's no reason for it to stop yet. Buy silver and gold here, or wait until gold exceeds its $1,226 top.

US DOLLAR INDEX dropped another 24 basis points to 79.002. Looks sick. Is this a correction, or return to previous low? Still looks sick for a while.

STOCKS continued their rebound rally today. Dow climbed 111.32 to 10,296.85. S&P rose 14.13 to 1,103.32. Here is another sucker rally that won't re-gain more than 50% of the January fall. Stay out of stocks.

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.

Silver and Gold Prices Have Turned Up, So Stop Waiting To Buy.

Gold Price Close Today :1104.30
Change: 21.30 or 2.0%

Silver Price Close Today : 16.653
Change: 47.0 cents or 2.9%

Platinum Price Close Today: 1550.10
Change: 48.80 or 3.3%

Palladium Price Close Today: 430.80
Change: 12.55 or 3.0%

Gold Silver Ratio Today: 66.31
Change: -0.610 or -0.9%

Dow Industrial: 10,185.53
Change: 118.20 or 1.2%

US Dollar Index: 79.19
Change: -0.20 or -0.2%

Friday I may not have made myself perfectly clear. I am always perfectly clear to me, but my wife says sometimes not to others. I was trying to admit how difficult it is to act and buy when a falling market hits your target while also pointing out that the GOLD PRICE had hit our downside target and made a double bottom at $1175. So it was time to swallow our fear and buy.

Also I wrote that confirmation of that bottom would come with a gold price close above $1,100 and a SILVER PRICE close about $16.80. Today gold closed much higher, up $21.30 to close on Comex at $1,104.30. Silver rose to $16.653, up 47c. So, gold unequivocally hit and breached our target, but silver not quite -- close enough for horseshoes, grenades, and rally confirmation, however. Silver and gold prices have turned up, so stop waiting to buy.

But wait! Why did the silver price fall further than gold last week? That is, why didn't it stop at its previous $16.80 bottom? 'Twould be explanation enough to say silver is more volatile than gold, period. It also might be an explanation to say that the Nice Government Men wanted to trash gold at its weakest last week, breaking it at $1075, and as always found it easier and cheaper to trash the much smaller silver market-- knowing that gold investors always keep one eye peeled on silver as a warning of future gold moves. But in speculating, I digress.

Bob the Technical Genius called today and opined that gold's pivotal test now awaits at $1,162. Either it clears that, or busts his Elliot Wave interpretation into tiny wavelets and drops washing gold far lower. Ignorant as I am, it interests me that $1,162 coincidentally was the January high and therefore also lateral support.

Don't be surprised if gold has to put up an ear-bitin', eye-gougin' fight tomorrow at $1,104 resistance. It will, and above that stands more fighting at $1,120, $1,132, and $1,140+. Tomorrow silver needs to close above $16.80. In fact, $17.00 would be even better.

Surprises, surprises, always surprises. That's life with markets, or any other human endeavor.

The US DOLLAR INDEX's five day chart looks like a rounding top, not a continuation. Could the dollar's rally stop here, drop again? Of course, but it ought to edge a little closer to that 81.50 target from the flag on its chart. If the dollar does fall then it betrays even worse weakness than I suspected. But remember: ALL (no exceptions whatever) currency exchange rates are manipulated by their governments and central banks in the short run, so every currency is a rattlesnake, ready to sink its fangs into your plans. Dollar index ought to rise still longer, but a close below 76.80 means it will pay another visit to 74.25.

The Dow Jones Industrials rose today, not so much on the US dollar's weakness as on exhausting downward momentum. In other words, the selling pendulum swung too far toward oversold, so it swung back the other way. It would have done that on news of the dollar dropping or on news of US tiddlywinks team potting a nurdled wink and upsetting the odd-on favorite UK team. Fullness of time was in the market, not in outside events. Stay away from stocks!

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.

Silver and Gold Prices May Have Exhausted Their Downside Inertia

Gold Price Close Today :1,083.00
Gold Price Close 22-Jan : 1,089.20
Change: -6.20 or -0.6%

Silver Price Close Today : 16.183
Silver Price Close 22-Jan : 16.918
Change: -73.50 cents or -4.3%

Platinum Price Close Today: 1,501.30
Platinum Price Close 22-Jan : 1,547.50
Change: -46.20 or -3.0%

Palladium Price Close Today: 418.25
Palladium Price Close 22-Jan : 430.90
Change: 6.80 or -2.9%

Gold Silver Ratio Today: 66.92
Gold Silver Ratio 22-Jan : 64.38
Change: 2.54 or 3.9%

Dow Industrial: 10,067.33
Dow Industrial 22-Jan : 10,172.98
Change: -105.65 or -1.0%

US Dollar Index: 79.482
US Dollar Index 22-Jan : 78.252
Change: 1.23 or 1.6%

The SILVER PRICE took a heavy wound this seek, the GOLD PRICE seems to be bottoming, stocks have broken down through important resistance, and the US Dollar Index finally pierced 78.8 resistance. Expect more dollar upside (to 81.50), more stock downside (to Dow 9450), and perhaps the end of metals' decline.

The GOLD PRICE has formed a double bottom with its 22 December low. Yes, it has closed a couple of bucks lower than 22 December, but not significantly. Yesterday and today closed at 60 cents difference, close enough to qualify as a double close. Those often mark a change of trend. On the daily chart the MACD and RSI look pretty well worn out on the downside, that is, ready to turn up for a change. But on the weekly chart they're enough to give you gray hair, because they could drop much further, which means price could drop much further. Today on Comex gold closed down 60c at $1,083.00.

SILVER'S momentum indicators paint much the same figure. Today the SILVER PRICE closed on Comex at $16.183, down 1.9c. Made double bottom with yesterday's low. Range was flat from $16.00 to $16.30, not much action.

Silver and gold prices may have exhausted their downside inertia. Now, whether that works for a bounce only or a genuine upside rally remains to be seen. That A-B-C correction I have been looking for since the December 2 peak has now been traced out. Question is, how low is low enough for that C-down-leg? Gold has made an A-B-C with the bottom of the A leg and bottom of the C leg equal. In silver's case, the C-leg is lower than A. Technically, that's enough, but can't say yet whether they will stop there. A handy indication they have stopped would be gold closing above $1,100 and silver above $16.80 - $17.00. In the other direction, if they break today's closes, the correction will last longer and prices will sink further.

Takes guts to buy here, but if you believe silver and gold are in a primary uptrend, which can't be gainsaid, then this point offers an opportunity to buy on a low. And that always wrenches your courage.

US DOLLAR INDEX, having at long last pierced 78.80 resistance, jumped another 50+ basis points today to close at 79.482. If that's a flag formation decorating the chart, then the upside target is 81.50. This tilts the playing field uphill for silver and gold prices, but 'twill eventually tilt back, in a month or two.

Regarding how directly other markets respond to the dollar ponder these numbers for performance from the first day of 2010:
US Dollar index, up 1.957 points or 2.5%
Dow, down 516.63 or 4.9%
Gold, down $53.40 or 4.7%
Silver, down $235.50 or 12.7%

As usual, silver is much more volatile than all else, but note that stocks and gold have fallen nearly twice as much as the Dollar Index has risen. Clearly, half of that price change has been influenced by other factors, mostly change in psychology and expectations. In other words, investments like other markets are the prisoners of fad and fashion. Be patient, it will turn our way.

Stocks have more to fear than silver or gold. Tradition holds that when stocks close January lower than they open, the ensuing year trends down. Today stocks barely held above the psychologically pivotal 10,000 mark today. Dow has already broken higher support levels, dooming itself to visiting 9,450 at minimum. I strongly suspect the Dow will drop below 6450 before 2010 ends. Look for the Nice Government Men to goose stocks on Monday, their usual practice.

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

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2009, 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.