Friday, August 21, 2009

The Gold Price Must Close Over $961 to Confirm an Upside Breakout

Gold Price Close Today : 953.20
Gold Price Close 14 August: 947.00
Change: 6.20 or 0.7%

Silver Price Close Today : 14.16
Silver Price Close 14 August: 14.715
Change: -55.50 cents or -3.8%

Platinum Price Close Today: 1,256.50
Platinum Price Close 14 August: 1,260.50
Change: -4.000 or -0.3%

Palladium Price Close Today: 281.25
Palladium Price Close 14 August: 276.00
Change: 5.250 or 1.9%

Gold Silver Ratio
Today: 67.32
Gold Silver Ratio 14 August: 64.36
Change: 2.96 or 4.6%

Dow Industrial: 9,506.96
Dow Industrial 14 August: 9,321.40
Change: 185.560 or 2.0%

US Dollar Index: 78.044
US Dollar Index 14 August: 78.801
Change: -0.757 or -1.0%

Yesterday's tense equilibrium in gold at US$940 gave way today. The GOLD PRICE burst upwards on open like a covey of quail, hit a high of $958, and closed on Comex at US$953.20, up $12.90. When gold popped, it ran to the next resistance level, that important $954-$955.

Now, this is an upside breakout, but to confirm gold must close above its last high, over US$961. Today gold broke out way above the downtrend line from early august. But a close over $965 is needed to break through the downtrend line from June.

If this is a genuine break-out, and not a fake-out, it will be a breakout that never looks back. Buy now or never.

This week's fall took the SILVER PRICE below its trading channel, but today brought it back to that threshold. Silver jumped 28.4 cents to close at $14.16 on Comex. It wants to go higher. The weekly chart remains in an uptrend from last November -- strong as the proverbial garlic milkshake. Buy silver, buy silver.

The US DOLLAR INDEX fell through 78.33 support, dropping 34.7 basis points to 78.044. If the dollar now confirms this break by closing below 77.43, which had been the bottom of the upside-down head & shoulders, then the dollar will most certainly have set its scrofulous feet on the road to 74, and banana republic status.

Sound overcautious? Well, markets have been slapping me around for 30 years, so I've learned to be both chary, wary, and leery. In other words, I've learned respect. The only time a move is really sure is when it's over.

STOCKS surprised me (and others, I'll bet) by cracking 9,400 to rise to 9,506.96, up today 155.91. S&P500 did even better, rising 18.76 to 1,026.13. What gives? Sometimes the B wave of an A-B-C correction(down - up - down) is so strong that it exceeds the previous high. Or maybe stocks have completed their correction and started moving up again. Either way, this no more shows health than the fevered red cheeks on a dying man. Be wise, use stock market strength to sell stocks and convert proceeds into silver or gold.

The DOW IN GOLD DOLLARS (DiG$) has moved up very, very slowly, i.e., stocks have slowly edged up against gold. There's probably not another G$10 (0.4838 ounce) left in it. That hints gold should rise to overtake stocks.

On 21 September I will be speaking in Lexington, South Carolina about silver and gold and about re-building local economies. That's really the only way we can get out of this economic swamp permanently. I'll announce the place as time grows nearer.

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

- Franklin Sanders, The Moneychanger

© 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.