Thursday, March 18, 2010

To Confirm a New Rally the Gold Price Still Must Exceed $1,140

Gold Price Close Today : 1127.40
Change: 3.40 or 0.3%

Silver Price Close Today : 17.407
Change 09.5 cents or -0.5%

Platinum Price Close Today: 1624.60
Change: 7.40 or 0.5%

Palladium Price Close Today: 477.50
Change: -2.60 or -0.5%

Gold Silver Ratio Today: 64.77
Change: 0.546 or 0.8%

Dow Industrial: 10,779.17
Change: 45.50 or 0.4%

US Dollar Index: 80.25
Change: 61.20 or 0.5%

The GOLD PRICE cared not a fig for the US dollar index's 61.2 basis point rise (to 80.30), and rose itself $3.40 to $1,127.40 when Comex shut down. Maybe that interest in gold hatched as investors look at the game of Dumb and Dumber played by the Dollar and Euro and decided not to play.

Yesterday the gold price sagged but failed to break on three trips to $1,118, and rose today to $1,127.40. However, silver fell 9.5c to $17.407. Whenever silver and gold prices close against each other that always whispers "CAUTION!" Yet for the nonce and barring any gainsaying breakdown, let us give gold the benefit of the doubt for sake of the big biceps shown at $1,118, while we picture that tomorrow it completes a rounding bowl pattern and closes at or above $1,132. To confirm a new rally the gold price still must exceed $1,140.

If the SILVER PRICE falls through $17.30 'twill fall much further. On the other hand if it closes above $17.60 twill fly. Like Gold, the silver price remains in an uptrend. Yet it needs to advance because in this world you are either moving forward or sliding backward, with very little opportunity to stand still, rest, dip snuff, and generally relax.

Yesterday and today the US $ Index neared its 50 day moving average (79.41) & used that as a springboard to jump back to 80.30 resistance. Mercy, what a lot of bootless back and forth! Over the past 3 weeks the dollar index has traced out a rounding top that has now rolled over and nearly out of bed onto the floor. Or, to ransack my imagination for another metaphor, think of it this way: Place a dinner plate face down on the table near the edge. Now ease it out over the edge a half inch, hanging over the tile floor. Do it again. And again. How far can you keep pushing the plate over the edge until gravity punishes your impudence? That's where the US dollar index stands, thumbing its nose at gravity.

The dollar index rose today, but I haven't a clue why. First the Germans are, then they are not, going to help bail out Greece. First they don't want the IMF involved, then 20 minutes later they do. Finally the Germans sort of backed a bailout, and maybe that pushed the dollar up by casting the shadow of monetary and financial moronism over the Euro. Indeed, this doesn't seem a sensible game of chicken for currencies to play,
namely, Who Among Us Is Least Stupid?

STOCKS bettered January's high, so the Dow is likely to reach 11,100. Now The Moneychanger Law of Government Subsidies clearly states, "Government money always decapitalizes whoever takes it," but it appears otherwise right now in the stock market. The Nice Government Men in the Plunge Protection Team have poured in money. Momentarily it looks like they are winning, but only momentarily. After the wine and dancing comes the repentance in dust, ashes, headaches, lawsuits, and a crashing stock market. Keep watching, but yield not to the temptation to join the conga line.

This morning was our first splendid spring day after too many cold, gray ones. Driving down Robinson Branch I saw by the branch a two clumps of daffodils. I stopped and cut them, and as I was walking back ot my car saw in the lane across the road another clump. I jumped the flowing shallow ditch and bent over to cut them. When I lifted up my eyes, I saw a "crowd, a host of golden daffodils," blanketing a quarter acre of the forest floor. Oftimes daffodils are all that remains of an old home site. People die, the house decays and falls, fences disappear, but year after year the daffodils appear to recall that this place was once home to love.

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.