Clearly, nobody in Washington can read history or follow a chart or scan markets. Today they passed the "we'll-all-die-of-starvation-and-poverty-without-it" bailout bill. The stock market dropped 381 points, which is pushing up toward one of the biggest drops we've seen in the last 12 months. And just to show you that Salvador Dali & the Surrealists are writing the script for the world today, the US DOLLAR index, which stands to lose most by the bailout rose 76 basis points. Were I an Washington Obama-apparatchik, I would spend tonight staring up at the ceiling, sweating bullets and blood. There's a monster loose out there, & he's threatening to gobble up the whole world.
But we misfits, we happy few who sold stocks & shunned mortgages while the enthusiasts were running wild, are humbly encouraged today (humbly, because we know that tomorrow markets may swing round & slit our throats) because gold rose 21.30 to 913.70, silver rose 30 cents to 1313.5, and the gold/silver ratio dropped below 70:1 to close at 69.62. Gold is pounding on the doors of its September/October highs, while silver (as I expected) has met little or no resistance in its leap from 1180 toward 1400. Only fly in the ointments is that the metals' RSIs and MACDs are beginning to look over-bought, but they can get more overbought still. If gold clears this 920-940 area, then pierces 980, nothing will stop its reaching 1200. On the other hand, if gold fails here, it would suffer a 1 - 3 month correction. I'd say it has an 70% chance of breaking thru 980 on this run.
The DOW stands at the lower limit. Either it catches here at once or it will sink through the last 7,580 low and continue to 6,000. Nice Government Men have their jobs cut out for them tomorrow, re-floating the stock market.
By the way, this pattern in gold trading smells heavily of mackeral, especially in view of silver's strength. Gold gets slapped down $20 bucks, closes very low, then in the aftermarket pops right back up, and follows thru next day with more gains. There are very resilient buyers beneath this market, and a very large seller around 920-930. Guess who the seller is (wink! Wink!).
Here's one last thought: Platinum rose 41 bucks today, and palladium rose 3 bucks to close at 1,036.10 and 212.40 -- over 1,000 & 200. Folks are running for cover, & they're looking for a metal roof.
Gold Price Close Today : $913.70
Change: 21.30 or 2.4%
Silver Price Close Today : $13.125
Change: 30 cents or 2.3%
Gold Silver Ratio: 69.62
Change: 0.032 or 0.0%
Dow Industrial: 7,888.88
Change: -381.99 or -4.6%
US Dollar Index Today: 85.63
Change: 0.77 or 0.9%
Dow in GOLD oz: 8.634
Change: -0.633 or -6.8%
DowInGOLD$s $178.48
Dow in SILVER oz: 602.20
Change: -42.70 or -6.6%
The DOW IN GOLD DOLLARS measures the Dow Jones Industrial Average in gold dollars (0.048375 troy oz. by law). The DiG$ depicts the Primary (20 year) Trend of stocks against gold. When the DiG$ is dropping, gold is gaining value against stocks in a trend that should last 15 - 20 years. The DiG$'s chart is identical to the Dow in ounces of gold, but gives us one unvarying measure all the way back to 1896. Because it shows the primary trend ("tide") of gold against stocks, for investors it is the single most important financial chart in the world today. Since its August 1999 high at G$925.42 (44.8 ounces), the DiG$ has trended down, targeting a G$80 - G$20 (4 - 1 oz. of gold will buy the whole Dow).
The DOW IN SILVER OUNCES shows how many ounces of silver are needed to buy the entire Dow. The DiSoz is trending down with a target of under 36 ounces.
The GOLD/SILVER RATIO is the gold price divided by the silver price, & shows how many ounces of silver it takes to buy one ounce of gold. The Ratio shows us the Primary (20 year) Trend of gold's value against silver. When the Ratio's trend is dropping, silver is gaining value against gold. This trend targets a gold/silver ratio of 16 ounces of silver to one of gold within the next 5 - 10 years. That implies that silver will massively, vastly outperform gold before this bull market ends. When both metals are rallying, the ratio often (but not always) drops, confirming the rally.
