Thursday, July 15, 2010

The Silver Price Needs Not to Fall Below $17.90 nor the Gold Price Below $1,198 for Continuation of the Uptrend

Gold Price Close Today : 1206.80
Change : -6.50 or -0.5%

Silver Price Close Today : 18.274
Change : 0.037 cents or 0.2%

Platinum Price Close Today : 1523.80
Change : 10.80 or 0.7%

Palladium Price Close Today : 465.75
Change : 12.45 or 2.7%

Gold Silver Ratio Today : 66.04
Change : -0.490 or -0.7%

Dow Industrial : 10,366.72
Change : 3.70 or 0.0%

US Dollar Index : 83.37
Change : -0.28 or -0.3%

The GOLD PRICE marched along splendidly until the US market opened. It dropped from $1,211 on open to $1,206, traded sideways until 11:00 when it literally shot from $1,208 to $1,218, trading sideways for one hour. Then it fell straight down in a few minutes, finally stopping at $1,202.80. Comex closed $1,206.8, down 6.50.

This paints a picture resembling an "island reversal" on the daily chart. Technically it is not quite an island reversal because those have gaps up to the island and gaps jumping off. Generally islands imply lower prices. Clearly, somebody big was standing at $1,218, waiting to hit gold in the head with a cricket bat.

More bewilderment: the gold price closed down but silver closed 3.7c higher at $18.204, refusing to confirm gold's trembling.

The SILVER PRICE chart also shows an island-like formation at $18.45, but when silver fell off the island, prices refused to fall lower than they had been before it jumped into the island.
So $18.50 resistance stopped the silver price in its first try to break down the $18.50 door.
The island implies lower prices tomorrow. 'Tis desirable for continuation of the uptrend that the silver price not fall below $17.90 nor the gold price below $1,198.

This morning the Dow opened 30 points in the hole, climbed to 10,400 near noon, then fell without any break until 3:30, by which time it had lost 60 points from yesterday. But wait! Mysterious friends began buying in the last 30 minutes to carry the Dow up to unchanged plus a gigantic 3.7 at 10,366.72. Confused, the SP500 contradicted the Dow's weaseling higher close with its own lower close, down 0.17 to 1,095.17. The Nasdaq and Nasdad 100 rose minutely while the Russell 2000 fell along with the Amex Composite, the NYSE composite, and the Wilshire 5000.

Get the picture? 'Tis a confused, bewildered market, and confused markets often do what? Drop.
The US DOLLAR INDEX tried to hold on the first half of the day but collapsed about midday, wilting to 83.205. It then drifted up a tad to where it is now trading at 83.366, down 27.7 basis points. The dollar continues to erode with no sign of let up. It has been dropping so long it makes me expect a surprise rally, but it appears to have made up its mind to reach 82.25.

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.