Tuesday, December 08, 2009

Now We Have to Reckon With a Gold and Silver Price Correction Lasting Two to Four Weeks

Gold Price Close Today : 1,142.80
Change: -$20.60

Silver Price Close Today : 17.785
Change: -55.1 cents

Platinum Price Close Today: 1411.20
Change: -20.40 or -1.4%

Palladium Price Close Today: 365.95
Change: -1.35 or -0.4%

Gold Silver Ratio Today: 63.45
Change: 0.257 or 0.4%

Dow Industrial: 10,285.97
Change: -104.14 or -1.0%

US Dollar Index: 76.20
Change: -0.43 or -0.6%

Market certainly made itself clear today. The GOLD PRICE was fine, bouncing along between $1,145 and $1,150 when it tried to run $1,152.50 about 11:00 am (Eastern). Attempt failed, then the gold price fell through $1,145 all the way to its low at $1,124.30 about 3:00 p.m. On Comex gold tumbled $20.60 to $1,142.80, then fell further in the aftermarket. Right now it's trading from $1,126 to $1,131.

Today the gold price fell through its 20 DMA (1,159.04). That sets up two diverse targets: about $1,100 lateral support coinciding with an $1,094 50 DMA, OR $1,085 (the 25% correction of the Nov. 2008 to Dec. 2009 move and 38.2% correction of the end-April 2009 to Dec. 2009 move.) Now we have to reckon with a correction lasting two to four weeks. Remember, though, that the sharpest plunge comes at the first, then it begins trading up and sideways.

The SILVER PRICE closed on Comex down 55.1 cents to $17.785. Today's low (17.445) roughly matches the Thanksgiving day low ($17.67), and also takes silver below its 20 and 50 DMAs. Next support is $16.77, then $16.00. If silver can't hold back the tide, the 200 DMA stands at $14.36. (Markets in a primary uptrend -- bull market -- from time to time correct (fall) to their 200 DMA, which acts as a floor beneath the market.)

Let reason, balance, and fair-mindedness wash over y'all for a moment. If y'all thought it was loads of fun riding this bull up, then don't complain when he stumbles to his knees. He will rise again.

Yahoo, the US DOLLAR INDEX finally rose today, and right now is trading at 76.198, up 43.1 basis points. The $ Index crossed above its 20 DMA (75.15) two days ago and today closed above its 50 DMA (75.68). Unless 76.50 resistance stops it, 'twill shoot for 77 - 77.50 where stronger resistance awaits. Odd, even at these low levels the dollar's momentum indicators appear strongly overbought.

Lo, both silver and gold prices were vulnerable to reactions after their extended rises, but one wonders -- just idly wonders -- whether their fall got a shove from the Nice Government Men? Or the dollar got a leg up? Why would they do that? Oh, oh, did I forget to mention that Bernanke had a hearing this week in congress about his re-appointment as Fed chairman? Naaawww, not a chance those things could be connected. . . . Is there?

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.