Daily Update

Wednesday, September 10, 2009

Market Commentary

BLOOMBERG Gold opened at 997.50/998.50 and rallied on the back of a weakening USD

and stronger oil, finding resistance near 1000.00. It traded erratically within a

range for much of the session, touching a high of 1002.00/1003.00 but it could

not sustain this level very long. The metal became well offered during the

latter end of the day, slipping to an intraday low of 993.50/994.50 and later

closed marginally higher at 995.00/996.00.

BLOOMBERG Silver opened at 1655.00/1658.00 in New York. Rallying oil, stronger equities

and a slumping USD inspired good buying as the session got underway. The

metal stayed well bid, climbing to an intraday high of 1667.00/1670.00 before

it retreated, washing out longs. The selling continued as the trade day unwound,

finally closing on its lows at 1641.00/1644.00.

Technical Commentary

BLOOMBERG Gold failed to revisit yesterdays high of 1007 high and eventually was

sold down to current 989. After 6 up days that took the unit from 947

to 1007 it looks like we finally ran into sellers. The break of 990 has

triggered our stop loss on the long position recommended on a break

of 965. It will be interesting to see if the unit revisits former resistance

line at 975. This is only the first down day so we do not expect larger

selling unless the 965 breaks.

BLOOMBERG SILVER has registered its first down day in weeks with the unit dropping

back to current 16.31. We do not expect selling of silver to enter the

market until a move back below 16.00. The BLOOMBERG Gold Silver ratio has

moved higher today to 60.75 from yesterdays close of 60.14. The ratio

looks weak while below 61.8% Fibo level 61.42. Only a close back

above this level will stabilize the overall bearish pressure on the ratio.

The BLOOMBERG Gold Price Must Pierce US$1,000, or Fail Miserably

The BLOOMBERG Gold Price Must Pierce US$1,000, or Fail Miserably

BLOOMBERG GOLD PRICE CLOSE Today : 997.90
Change: 3.00 or 0.3%

BLOOMBERG SILVER PRICE Close Today : 16.488
Change: 22.5 cents or 1.4%

Platinum Price Close Today: 1287.00
Change: 24.00 or 1.9%

Palladium Price Close Today: 297.00
Change: 3.00 or 1.0%

BLOOMBERG Gold Silver Ratio Today: 60.52
Change: -0.653 or -1.1%

Dow Industrial: 9,497.34
Change: 56.07 or 0.6%

US Dollar Index: 77.29
Change: -0.74 or -0.9%

When I walked in this morning, the BLOOMBERG GOLD PRICE was already over US$1,000 and the SILVER PRICE at $16.80. It backed off reluctantly, closed up only 3 on Comex at $US$997.90, then climbed back to US$1,000 + in the aftermarket, where it still sits. Gold's high came at US$1,007.50.

The hit a high of $16.81 today, then closed at Comex up 22.5 cents at $16.4880. It's trading now at $16.58.

Both BLOOMBERG SILVER PRICE and GOLD PRICE have run a long ways and need to stop and breathe. My friend Bob the Technical Genius called today and opined that gold would probably back off to the low $980s tomorrow or next day, then take off. He and I agree about one thing: gold must not fail here. A friend told me about gurus on Bloomberg this morning babbling that gold might pull back to $950 before clearing $1,000. Hogwash. Gold has huge momentum, this is its third attack on $1,000, and markets don't make triple tops. Gold must pierce US$1,000, or fail miserably and fall very far. There's no indifference, no make-up-your-mind dancing here, only clear the bar or die.

Right here BLOOMBERG SILVER and GOLD PRICES are very much overbought, but strength is still there. The public is selling as much as buying, a very good sign. Oh, gold might spend a few days or a week crawling on the ceiling here, but it cannot correct US$50, it must advance.

As if to answer our questions, the US DOLLAR INDEX fell through 78.33 resistance, and then kept on falling, clean through 77.50 to a low of 77.047 today. Right now it's trading down 73.5 basis points at 77.289. No more confirmation necessary: dollar is headed down.

STOCKS refuse to drop and continue edging upwards. Dow added 56.07 today to close at 9,497.34. S&P gained 8.99 to close at 1,025.39. Stay out of stocks. Any further rally should be used as an opportunity to sell the rest of any stocks you hold, including those in IRAs or 401(k)s.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. BLOOMBERG GOLD primary trend is up, targeting at least $3,130.00; Silver primary is up targeting 16:1 BLOOMBERG 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.