Friday, April 09, 2010

Gold Price Makes a Confirmed Breakout

Gold Price Close Today : 1161.10
Gold Price Close 26th March : 1125.10
Change: 36.00 or 3.2%

Silver Price Close Today : 18.34
Silver Price 26th March : 17.876
Change 46.40 cents or 2.6%

Platinum Price Close Today: 1,722.30
Platinum Price 26th March : 1,667.20
Change: 55.10 or 3.3%

Palladium Price Close Today: 512.30
Palladium Price 26th March : 488.85
Change: 23.45 or 4.8%

Gold Silver Ratio Today: 63.31
Gold Silver Ratio 26th March : 62.94
Change: 0.37 or 0.6%

Dow Industrial: 10,997.35
Dow Industrial 26th March : 10,927.07
Change: 70.28 or 0.6%

US Dollar Index: 80.885
US Dollar Index 26th March : 80.888
Change: -0.00 or -0.0%

For the US DOLLAR INDEX, 'twas a week full of sound and fury, signifying nothing but losing 0.3 basis point. Pitiful.

OWCH! The Dollar index slid through 81.20 support then finding no purchase, kept on sliding all the way down 64.9 basis points to 80.885. That's a smidge below the 20 day moving average at 80.93. Not far removed lies the 50 DMA at 80.48, coincidentally another support area. Dollar ought to drop the rest of the way to 79.50 at least, maybe as far as 79.00. A peek below 79.00 would be deadly, pole-axing the dollar and its prospects for resuming a rally.

Don't y'all think it's odd that on the very day the Dow makes a new high for the move, the Dow in Gold Dollars makes a new low for the move at G$195.79 (9.471oz)? That shouts that stocks have turned down against gold, and that shortly stocks will also begin losing in US dollar terms as well.

The Dow rose today 70.28 to 10,997.35, rather than following through on yesterday's fall. As I have been moaning and groaning and warning all the way up, 'tis likely the Dow will hit 11,100 (now just about the 200 week moving average at 11,133.33). Truth is, regardless what the prostitutes in Washington and pimps on Wall Street say, this rally is built on imagination, foolhardiness, ignorance, fraud, and false hope because all economic facts are laughing in its teeth.

Stay away from stocks. Get out now if you have any. A big fall loometh, probably not later than end of April.

As a professional worrier my heart doesn’t exactly sing when gold rises 10 out of the last 11 days and for the last 7 days running. Every market needs to breath now and then. But behold! The January closing (not intraday) high was $1,150.70. Last two day's closes were $1,152.30 and $1,152.20, and today gold rose another $8.90 to $1,161.1. That is a confirmed breakout. On the weekly chart gold has climbed above its 20 week moving average.

The upside-down head and shoulders gold traced out from December to April points to a target of $1,240. Gold should reach $1,200 anyway, where the speculators will rush in to sell. I'm not so much worried about gold as I am what is driving it. What looming disasters have we not yet identified that are driving gold?

The GOLD/SILVER RATIO fell to 63.03 today. 'Tis trending down, right enough, but I want to see it fall through 63, 62.5, then 60. Only then will we get that startling tumble that will set us up for a swap from silver into gold.

The SILVER PRICE chart, believe it or not, doesn't appear quite as hyperactively manic as gold's. With little resistance between here and 18.90, silver will attack that barrier next week. Of course, every smarty who trades commodities & thinks he can read a chart will want to sell silver there, so expect strong resistance. I didn't say silver would fail (I don't know) but it will have to wrestle with Godzilla at 18.90. This week silver broke above its 20 week moving average, so it may have only begun to climb. It's certainly set up for bigger gains.

If any strategy at all makes sense, you have to buy breakouts. Of course you don't believe them -- you never do -- but that's only a bull market climbing a wall of worry.

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.