Friday, March 19, 2010

Somebody Hit the Gold Price With a Nine-Pound Hammer Today

Gold Price Close Today : 1,107.40
Gold Price Close 12th March : 1,101.70
Change: 5.70 or 0.5%

Silver Price Close Today : 17.017
Silver Price Close 12th March : 17.024
Change -0.70 cents or -0.0%

Platinum Price Close Today: 1,609.00
Platinum Price Close 12th March : 1,608.40
Change: 0.60 or 0.0%

Palladium Price Close Today: 467.00
Palladium Price Close 12th March : 462.10
Change: 4.90 or 1.1%

Gold Silver Ratio Today: 65.08
Gold Silver Ratio 12th March : 64.71
Change: 0.36 or 0.6%

Dow Industrial: 10,741.98
Dow Industrial 12th March : 10,624.69
Change: 117.29 or 1.1%

US Dollar Index: 80.772
US Dollar Index 12th March : 79.802
Change: 0.97 or 1.2%

If y'all wonder why I so often sound like a man obsessed with hands -- "On this hand . . . On that hand . . ." -- it's because I have so often been humiliated by the market that I understand that on any given day, there's a 50% chance the market will ascend, and a 50% chance it will descend. Hence it behooves one to set limits for either direction.

I have been hedging my bets and tempering my loathing for the scrofulous US dollar by noting that it must close below 79.50-79.60 before it would plunge, and that otherwise it remaineth in an uptrend. That's why today I am not too embarrassed to report the dollar index rose 54.7 basis points to 80.772. That raises other questions because it riseth above the 80.30 resistance that has so often in the last days turned the dollar index back. That sets it on the track to re-visit the February 81.34 intraday high, or even hit my longstanding 81.50 target. When the dollar index approaches that level, we'll see whether it can conquer that bastion of resistance.

Somebody hit the gold price with a nine-pound hammer today. It was just walking on down the street between $1,120 and $1,125 when suddenly it keeled over -- WHAM! -- then gapped down just above $1,115 and hit $1,107 before it began trading sideways even a little. Low came at $1,102.32, but the damage was all done in the space of 30 minutes at most. On Comex gold settled at $1,107.40, $20 lower than yesterday.

That scrambles the outlook for gold. It closed beneath the 20 day moving average (first harbinger of a trend change) and worse, outside the existing uptrend line -- not far, but outside.

Now we must ask, will the gold price follow through toward the center of the earth, or lower. I doubt it, because it has kept on showing trading range behavior, where it can't pierce the top of the range but doesn't fail at the bottom, either. No, the low was posted in February with that $1,050 close, and now we are privileged to be tortured by range trading.

How can you know I am wrong? Sufficiently dispirited, the gold price might trade as low at $1,090, or it might not break $1,100. I certainly would buy gold if it does sink that low, and more if it sinks lower. Remember, gold remains in a long-term primary uptrend (a bull market) and presently we are watching only a correction. That's your chance to buy gold on sale, so don't miss it.

Yesterday I warned that if the silver price fell below 17.30 it would tumble. Today it plunged in tandem with the gold price, falling 39c to close on Comex at a face-saving 17.017. Yet here is an oddity: silver remains above its 20 DMA and above its uptrend line. Still, other indicators (RSI and MACD) appear to have rolled over earthward or are about to. Short term silver remains in an uptrend, but longer term it still wallows in the descent from the December high. Next week could see lower prices, with a target of 16.50 support or even the 200 DMA (now 16.20). A close above 17.64 reverses the outlook.

STOCKS today made the first half of a key reversal, namely, a break to new high territory with a close lower than the day before's. Next half must come on Monday, a close lower than today's. That might be the top for stocks.

Y'all enjoy your weekend!

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.