Friday, July 30, 2010

As Long as $1,180 Holds, the Gold Price Will Advance or Move Sideways Into August

Gold Price Close Today : 1,181.70
Gold Price Close 23-Jul : 1,187.70
Change : -6.00 or -0.5%

Silver Price Close Today : 1798.7
Silver Price Close 23-Jul : 1809.6
Change : -10.90 or -0.6%

Platinum Price Close Today : 1,573.70
Platinum Price Close 23-Jul : 1,546.00
Change : 27.70 or 1.8%

Palladium Price Close Today : 497.50
Palladium Price Close 23-Jul : 470.00
Change : 27.50 or 5.9%

Gold Silver Ratio Today : 65.70
Gold Silver Ratio 23-Jul : 65.63
Change : 0.06 or 0.1%

Dow Industrial : 10,465.94
Dow Industrial 23-Jul : 10,412.74
Change : 53.20 or 0.5%

US Dollar Index : 81.537
US Dollar Index 23-Jul : 82.664
Change : -1.13 or -1.4%

This week probably saw upside reversals in SILVER and GOLD PRICES and a downside reversal in stocks, and an upside reversal in the US dollar index.

On the five-day chart the GOLD PRICE has traced out a shallow upside down head and head and shoulders Tuesday-Wednesday-Thursday. Today gold confirmed that by rising over $1,170 and closing above $1,180, where it had broken down on Tuesday. As long as $1,180 holds, the gold price will advance or move sideways into August. Expect no big moves until mid-August. The damage done to gold market morale by July can only be undone by rising above $1,225. MACD turned up today.

Since the gold price now appears to have bottomed it makes little sense to wait for it to visit lower prices, since that probably won't happen. Go ahead and start buying it. Gold closed on Comex today at $1,181.70, up $13.30.

Today's picture for the SILVER PRICE is not quite identical to gold's. If silver had closed above $18.00, that would have been wholly unequivocal. However, silver closed on Comex up 38.6c at $17.987. Close enough, perhaps, for government work. In the aftermarket it's trading at $18.02 - $18.06.

If silver holds above $17.90 on Monday, go ahead and buy some.

The US DOLLAR INDEX feebly sought to rally today, and rose to within inches of 82, only to be slapped soundly back into its place. From yesterday it fell 10.4 basis points to 81.537. By small margin over yesterday the dollar made a new low for the move today. Presently 81.45 is support. The dollar could be rounding out a bottom, but that may not be completed until it hits the 200 DMA at 80.52. A close above 82, then 83.5 confirms a rally in progress. If the dollar is not bottoming, then woe awaits the dollar! But I believe some sort of dollar rally will soon materialize.

When you put make-up on a pig and a gold ring in her snout, what do you have? A pig, still. No amount of prettifying changes a pig into a partridge or a peacock or a pretty woman. So also, no amount of tape-painting by the Nice Government Men and their yellow cur dog lackeys can make a rotten investment locked in a primary downtrend -- stocks -- into a wise and profitable investment.

For two days stocks have oscillated around unchanged, spending most of the day below unchanged, failing over and over at unchanged, and then closing "higher" by pennies. Friends, this is no gain. This is a stalled market at its last high, having double topped Monday and Thursday. Stocks look like Wile E. Coyote in the Roadrunner cartoons when he runs off the edge of a cliff and hovers that single instance of recognition before plunging into the abyss below. Today the Dow closed 10,465.94, down 1.22 and the S&P500 closed up 0.07 at 1,101.60.

Stay away from stocks.

Many thanks to all you readers who kindly sent condolences on the passing of Susan's mother.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2010, 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.