Thursday, July 29, 2010

If the Gold Price Did Not Make its Final Bottom on 27 July, Then it Will Head for the 200 DMA at $1,145.70

Gold Price Close Today : 1168.40
Change : 8.00 or 0.7%

Silver Price Close Today : 17.601
Change : 0.178 cents or 1.0%

Platinum Price Close Today : 1561.10
Change : or 0.0%

Palladium Price Close Today : 486.75
Change : or 0.0%

Gold Silver Ratio Today : 66.38
Change : -0.219 or -0.3%

Dow Industrial : 10,467.16
Change : -2.60 or 0.0%

US Dollar Index : 81.63
Change : -0.55 or -0.7%

Monday I was working in such a blind heat trying to get out of here and over to Memphis that I botched my announcement terribly. Our friend Stan Poston passed away Saturday, and we were planning on his funeral Monday Morning, when on Sunday we learned that Susan's mother had unexpectedly died, peacefully in her sleep, on Saturday as well. She was 90 and still lived alone and drove her own car. She was a wonderful Christian woman, mother of six children, full of grace and love. "Right dear in the sight of the Lord is the death of his saints."

The US DOLLAR INDEX has looked sorry all this week, but seems to be trying to turn up, even though today it made a new low for the move at 81.63, down 55 basis points. Next target, if it is not yet turning, is the 200 DMA at 80.49. Surely it ought to rally off that, even if only a dead cat bounce.

STOCKS appear to have baffled me, remaining in the 10,450 range. I give not a hoot. I wouldn't buy stocks with your money, and those who fall into this trap will follow it -- with their money -- into a bottomless pit. Today the Dow closed down 2.16 at 10,467.16 and S&P 500 closed at 1,101.53, down 4.6.

Tuesday the GOLD PRICE broke $1,180 support and repeated the same curious pattern we've seen over and over in gold and silver lately: instantaneous straight up or down rises and drops that then trade dead sideways. Very thin markets dominated by traders and stop orders, looks like.

My $1,165 gold target has been fulfilled and exceeded. Look at these closes: 26 July, $1,183.10, - $4.70 27 July, $1,158.00, down 25.10 (low $1,155.90) 28 July $1,160.40, up $2.00 29 July, $1,168.40, up $8.00

If the gold price did not make its final bottom on 27 July, then it will head for the 200 DMA at $1,145.70, or maybe the round number $1,150. RSI has turned up but not the MACD, although a non-confirmation of the lower prices is beginning to show there.

Had I been here yesterday I would have bought gold. Look now for a little dip back toward $1,160 - $1,150 and buy there. I bought some today, because I don't much believe it will re-visit $1,160, and gold above $1,170 would be a buy because it would be an upside breakout.

SILVER's chart might well be a carbon copy of gold's. Straight down, instantaneous drop from 1810c to 1760c, lower low with a spike bottom yesterday, then slightly higher today. 26 July, 1819.5c, up 9.9c 27 July, 1762c, down 57.5c 28 July, 1742.3c, down 19.67c 29 July 1760.1c, up 17.8c.

As with gold, the bottom came Wednesday with a spike to 1730c. 200 DMA stands at 1767c, so that touchback is fulfilled. Silver must hold 1722c. Buy on any backup to 1750c, or breakout above 1770c.

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.