Monday, March 22, 2010

Clearly $1,100 has Become the Line in the Sand for the Gold Price

Gold Price Close Today : 1107.40
Change: -20.00 or -1.8%

Silver Price Close Today : 17.017
Change -39.0 cents or -2.2%

Platinum Price Close Today: 1596.50
Change: -12.50 or -0.8%

Palladium Price Close Today: 457.00
Change: -0.20 or -0.0%

Gold Silver Ratio Today: 65.08
Change: 0.309 or 0.5%

Dow Industrial: 10,785.89
Change: 43.91 or 0.4%

US Dollar Index: 80.77
Change: 0.55 or 0.7%

The GOLD PRICE today reached $1,092.20 below and $1,108.55 above. Comex-closed at a morale-bruising $1,099.30, down $8.10. Today's trading traced out a spike bottom about 10:30 and gentle recovery the rest of the day. Clearly $1,100 has become the line in the sand.

The GOLD PRICE, meseemeth, is building a long, narrow triangle that will leave us all hairless with frustration. If so we might have seen the low today. On the other hand, a close below $1,090 - $1,085 would buy gold a ticket to $1,050, the last low close. Then I squint and look at the chart another way and again that upside-down head and shoulders emerges. If that is ruling the action, the gold price won't drop below $1,085 at most.

Doesn't matter, y'all are presently watching bargain gold and silver prices. Buy some here, and more if it drops.

The SILVER PRICE landed on its uptrend line today and even pierced its 50 day moving average ($16.82). After bumping along $16.60 - $16.65 from 9:00 to 10:30, the silver price rose sharply toward $17.00. Comex closed $16.92, down 9.7c, but the silver price is now trading at $16.99. If silver loses its grip here it must reckon with a fall to $16.50 - $16.00 and a sterling buying opportunity. (Yes, yes, that is a play on words. Sterling - silver -- get it?)

STOCKS did NOT pass the second day test of the Key Reversal posted Friday, namely a lower close today. The Dow ascended a lofty 43.91 points to roost at 10,785.89. The S&P500 took wing, but somewhat like the kiwi or dodo or their ilk, and soared a mere 5.91 points.

Odd, isn't it, that roughly 75% of Mondays in the last year have been up-days for stocks? Odd, odd, odd, as if the Nice Government Men come into the office on Mondays and first on their list stands "Goose stocks." Matters not: stay away. Yet 45 days and mourning will haunt stock markets.

The DOLLAR INDEX, remember, hit 81.30 in mid-February, then again at end-February. Friday's jump to 80.772, although certainly ranked as a breakout above the then-ruling downtrend, does not so qualify in the 30-day view. Generally a breakout on strength ought to move on, but not with the dollar today.

Yet here also might be the oft-witnessed touchback to breakout point or the "final kiss good-bye." A market breaks out (up or down), then reverses and touches back to the breakout point before roaring away in the same direction as the breakout.

Good chance we are seeing that in the $ index, but a close below 80.20 would drag the dollar back into that downward channel. Recall that the Dollar remains in an uptrend in spite of a sickly day.

Y'all realize what I do with these commentaries might easily be termed "entertainment." The reason is simple: most days nothing happens in markets. It's like a pregnant woman. Something is happening, but you can't see it, you can only guess what's happening by what you can see. Then suddenly a very big and decisive event happens that clarifies beyond all denying what has been happening all along.

Markets are the similar. Most days nothing decisive happens. You just watch, waiting for that watershed moment. In between, it's not action, just entertainment.

That's why it's so crucial to your success in investing to identify the primary (15-20 year) trend and align your investments with that trend. Like buying stocks at 776 in 1972 and selling at 11,722 in 2000. Or buying gold and silver in 2001 at $254 and $4.01. That's the first principle of investing: always line up with the primary trend, never against it.

So most of what I do is entertain, and encourage y'all to stick with the primary trend.

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. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.