Monday, November 23, 2009

The Overbought Gold Price Becomes More Overbought, and Climbs Still

Gold Price Close Today : 1164.70
Change: 17.90 or 1.6%

Silver Price Close Today : 18.603
Change: 17 cents or 0.9%

Platinum Price Close Today: 1457.30
Change: 9.90 or 0.7%

Palladium Price Close Today: 369.25
Change: 4.30 or 1.2%

Gold Silver Ratio Today: 62.61
Change: 0.957 or 1.6%

Dow Industrial: 10,318.16
Change: -14.28 or -0.1%

US Dollar Index: 75.13
Change: -0.35 or -0.5%

Whoa. Overbought becomes more overbought, and climbs still. Makes me get very quiet and thoughtful.

I woke up very early this morning, while the birds were still asleep at 4:30 and
the GOLD PRICE already had surmounted $1186. Silver was $18.85. Gold indicators become more overbought day by day, but gold keeps on steadily advancing. The SILVER PRICE RSI and MACD indicators can stand to climb still more. In euros the gold price verges on breaking out upside through E790. Gold in Yen has long ago broken out above Y97,180 and today closed Y103,800.

A word about "overbought." I remember much of the decade of the 1990s watching the Dow grow more and more overbought. It was impossible to gauge. It would form bearish rising wedges, then break out to the upside. When a market is riding a bull, there's just no telling where it will stop.

Interesting, too, that the gold's bullish behaviour is driving otherwise sane analysts crazy. Analysts whom I thought understood that only monetary demand drives gold's price crazy are now falling back on jewellery demand, as if gold's price was determined by the demand for earrings or anklets. Help -- gold is not oil.

Sure, some of the speculative fever that the Fed has spawned with its low interest rate-run the printing press policies has slopped over into gold, but somebody is not thinking clearly. This is a THIRD wave up, unpredictable, surging like a full moon tide. Ride it till it falls, then when it gets up, mount back up and ride it till it falls again. Point is, overbought can get a lot more overbought still.

I don't think a one of y'all would complain if I completely miscalled gold or silver's movements, but you let me get one Latin verb or modifier wrong, and y'all are on me like a duck on a June bug. Okay, I was wrong. Technically it should be "res ipsA loquitur," because res is feminine & so ipse -a -um must agree with it in gender.

The US DOLLAR INDEX peaked Friday at 75.85 and has sunk ever since. Today once again the dollar bounced along 74.90 support, the bottom of the trading range (74.946 low). The dollar may be turning up, may be preparing to rally, but at the same rate as a glacier speeding through the Alps. Dollar Index flat-lined all day 'twixt 75.095 and 75.15. Today the scrofulous dollar closed at 75.127, down 35.3 basis points.

The Dow jumped up early this morning and stayed level to lower the rest of the day. Slowly, slowly, as always, stocks are rolling over downward. Still may see a spike to
to 11000.

In spite of the Dow's continuing gains, the Dow in Gold Dollars is being crushed. Today it closed at G$183.13 (8.859 oz), moving toward the bottom of its range and another waterfall.

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.