Monday, August 09, 2010

Expect Frustrating Lack of Direction From Silver and Gold Prices, Because it is August

Gold Price Close Today : 1200.70
Change : (2.70) or -0.2%

Silver Price Close Today : 18.229
Change : (0.230) cents or -1.2%

Platinum Price Close Today : 1544.70
Change : -28.00 or -1.8%

Palladium Price Close Today : 477.50
Change : -20.55 or -4.1%

Gold Silver Ratio Today : 65.87
Change : 0.674 or 1.0%

Dow Industrial : 10,698.75
Change : 45.19 or 0.4%

US Dollar Index : 80.70
Change : 0.34 or 0.4%

Today's quotation:
"{P]erpetuities and monopolies are contrary to the genius of a free state, and shall not be allowed." Tennessee Constitution, Art. I, Section 22. So, can somebody explain to me about the Federal Reserve and why it is permitted to operate in Tennessee?

Here I am, still trying to parse the US DOLLAR INDEX. Right now it's trading at 80.701, up 34.2 basis points. On the five day chart Friday shows a spike bottom to 80.10. Today the dollar traded above 80.40 almost all day. RSI is as overvalued as a $5 gift card at WalMart, and the MACD histogram has bullishly diverged from price action, although the MACD has not quite turned up. Dollar's 200 day moving average is at 80.68, right about where it now stands. What's at stake? If the dollar can't turn around here it risks falling to 74.25.

STOCKS are making that one last spike upward I mentioned on Friday. However, it ain't so great. High was 10,719.95 for the Dow, but it couldn't close above 10,700 resistance, so ended at 10,698.75, up 45.19. S&P 500 closed at 1,127.78, up 6.14. I count today as very weak action. Why? Because once the Dow cleared that 10,700 resistance, it ought to have run. Now it might come back tomorrow and make another try, but this is week. Please stay away from stocks.

Mystery forces slapped the SILVER PRICE around again today. From the opening the weight of selling over- powered buying, driving silver back, back, back from 1855 cents to 1824c at 10:00 a.m. Silver rallied to 1835c, then fell to a low of 1821c at 1:30. It's tough to find a pattern when price action chops back and forth as it has the last few days, but the fact remains that buyers outweighed sellers enough to lift silver from 1735c on 27 July to over 1820c today. Trend is still up, with that July low most likely the bottom. To confirm that forecast, silver should not close below 1800c, and sometime this week ought to make another assault on 1860c.

Today silver closed at 1822.9c, down 23c.

Like silver, the GOLD PRICE has knocked twice now on overhead resistance at $1,210, but the door hasn't opened. Gold will have to kick it down. Gold backed off today $2.70 to close at $1,200.70, hanging by a fingernail 70c above $1,200. Awww, I don't think $1,200 has more than cosmetic importance here. The real support is at $1,195. Still, 'twere better if gold does not dip below $1,200. Maybe gold has done penance enough now for its rise from the $1,155.90 low on 27 July. But we ought to expect frustrating lack of direction from silver and gold, because it is August, traditionally a tepid season in metals, with irritating and unpredictable sideways trading.

Had to do some dirt work with our tractor today, clearing a place for a stone wall a friend is building for us. I'm about as good with a front end loader as I am with ballet shoes, but it was fun. Rained a frog-strangler just as I finished, so I had an ironclad excuse to stand on the front porch and smell the rain and eat a perfect peach off our tree. Later I rode back along Robinson Branch Road, overhung with trees and breathing the magical perfume of Tennessee woods. I may have a hard time coming back into the office tomorrow.

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.