Tuesday, July 13, 2010

Tomorrow the Gold Price Ought to Advance.

Gold Price Close Today : 1213.30
Change : 14.80 or 1.2%

Silver Price Close Today : 18.237
Change : 34.0 cents or 1.9%

Platinum Price Close Today : 15.24
Change : -1,497.76 or -99.0%

Palladium Price Close Today : 465.95
Change : 12.65 or 2.8%

Gold Silver Ratio Today : 66.53
Change : -0.437 or -0.7%

Dow Industrial : 10,363.02
Change : 146.75 or 1.4%

US Dollar Index : 83.52
Change : -0.68 or -0.8%

The SILVER PRICE has made a double bottom at $17.60 over the past 11 days. Overnight the silver price rose steadily from $17.85 to $18.15 beginning about 6 hours before New York open. On open it shot up to $18.30, and the rest of the day traded flat between $18.20 and $18.30. Comex closed $18.237, up 34c (+1.9%). Unless this is yet another trading range fake out, the silver price tomorrow ought to overleap $18.30, but that's not the big roadblock: $18.50 is. Clustered around $18.50 are also the 20 day moving average ($18.43) and the 50 DMA ($18.38). A close below $18.15 gainsays all this.

The GOLD PRICE climbed over that $1,200 fence in European trading and jumped straight up (I am tempted to say "gapped") to $1,205 - $1,206. On the New York opening it bounced straight up again over $1,2210, made a quick sideways flag, then jumped again to $1,217.65 at 9:00 a.m. Rest of the day gold traded sideways, drifting slightly lower to a Comex close at $1,213.30, up 14.80 (1.2%).

The last 11 trading days have left a pattern that looks like an inverted head and shoulders, a bottoming and reversal formation. If that is correct, the neckline is at $1,212 - 1,213. Tomorrow gold ought to advance. Considering the large drop that started this correction, not much resistance lies between here and $1,225. The gold price needs to close above $1,225, then confirm and add credibility by closes above $1,230 and $1,240. the 20 DMA, tripwire for higher prices, stands at $1,226.56; 50 DAM at $1,217.16.

If the gold price falls through $1,210 it will sink for another round below $1,200.

My, my, stocks ran hog-wild today. Dow rose 146.75 (1.44%) to 10,363.02 and S&P500 climbed 1.54% (up 16.59) to 1,095.34. Almost all that gain came early in the day on open, while the balance of the day was spent bouncing between 10,350 and 10,400. Maybe big selling overhead slowed it down?

Now stocks may rise for a while yet, so at this point I have to remind y'all that one-day parties do not a long term trend make, and the long term trend fro stocks is down.

Since August 1999 and June 2003 stocks have lost eighty per cent against gold and silver. They will lose another 80% from here. Adjusted for inflation, stocks have lost you money since 2000. Socks are light years from undervaluation, and 4 - 5 years from a bottom. I can think of no reason whatever to buy stocks, other than a wish to commit financial suicide.

So you see, a one-day or a ten-day rise in stocks make no difference to me, I don't want to ride on the Titanic.

The US DOLLAR INDEX ran head first into a titanium wall at 84.50, then slid down the wall to end today at 83.519, down 68.4 basis points (-0.88%) for a new low for the move as well as a new closing low. After all the losses it has suffered lately, you'd think the dollar would stage a modest rally, but none appears. Yesterday's fair beginning became today's pitiful debacle. I would never trade currencies, for the pellucidly simple reason that you cannot possibly read the chart correctly. Why? because governments manipulate their currencies, and throw surprise parties at your expense. So you can look at a currency chart for a general idea of trend, but that trend is always subject to pre-emption, if only for a short time. Euro today hit a new high for the move at $1.2736. And you may assume that the Chairman of the US Fed and Kommissar of the European Central Bank are working jointly to manipulate exchange rates.

All of that is a preposterously prolix way to say, You can never tell when the dollar will turn abruptly and without reason, you can only be certain that the primary trend is firmly DOWN.

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.