Tuesday, August 04, 2009

Next Logical Gold Price Target, Probably Within Two Days, is US$990

Gold Price Close Today : 967.50
Change: 10.90 or 1.1%

Silver Price Close Today : 14.688
Change: 44.3 cents or 3.1%

Platinum Price Close Today: 1266.50
Change: 27.00 or 2.2%

Palladium Price Close Today: 276.65
Change: 4.00 or 1.5%

Gold Silver Ratio Today: 65.87
Change: -1.283 or -1.9%

Dow Industrial: 9,320.19
Change: 33.63 or 0.4%

US Dollar Index: 77.76
Change: 0.17 or 0.2%

The Gold Price was not to be denied today, with a steady climb upward from opening bell to Comex close and beyond to 970.05, then settling down to mid US$960s support. The gold price rose 10.90 to close on Comex at 967.50. This has crushed resistance at 960, so next logical gold price target, probably within two days, is US$990. The MACD indicator shows this rally could go on for another four weeks, but the RSI looks overbought.

Climbing the same old wall of worry. I notice that I have spells of doubt -- is this really it? Crazy, but maniacal silver & gold bug that I am, my thoughts have fought every rally, all the way up. Human propensity to worry.

While the gold price rose 1.1% today, the Silver Price shot up 3.1%. Comex silver closed at 1468.8 cents, up 44.3 cents. GOLD/SILVER RATIO is dropping sharply, typical of a metals rally, but cautionary, also. Silver sometimes rises in the latter part of the rally.

I'm weighing two possible outcomes here, but let's get stocks & the dollar out of the way first.

US DOLLAR INDEX dead-cat-bounced today, up 17 basis points to 77.764. Dollar index should hit 74 before it has any chance to turn around. What I like least about this rally is that gold is rising against the US dollar only, & working sideways against the yen & euro. Ought to be rising in all three currencies for a strong, healthy rally.

STOCKS today managed to climb baby steps. Dow rose 33.63 to 9,320.19 while S&P500 gained 3.02 to 1,005.65. Rally continues. A friend today reminded me that the spring 1930 Dow rally took back 62% of the foregoing fall. A comparable rise today would take the Dow over 11,000. Don't get all wheezy on me, because it remains a SUCKER RALLY. Twill be followed by a gigantic fall.

Anyway, stocks are climbing in nominal terms, but against gold they are falling. Gives you a little different viewpoint, huh?

Two possible outcomes are (1) surprise dollar rally, and (2) no dollar rally. If we get a surprise dollar rally off, say, 74, then gold won't pierce $1,000 for 3 - 6 months. If no dollar rally ensues, the gold price will break thru $1,000 early in the fall, then run to US$1,300 very fast. Silver will be on board for the ride.

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.