Price Close Today : 1193.70
Change : 8.50 or 0.7%
Silver Price Close Today : 18.263
Change : (0.144) cents or -0.8%
Platinum Price Close Today : 1581.30
Change : 1.20 or 0.1%
Palladium Price Close Today : 496.25
Change : -7.00 or -1.4%
Gold Silver Ratio Today : 65.36
Change : 0.973 or 1.5%
Dow Industrial : 10,680.43
Change : 44.05 or 0.4%
US Dollar Index : 80.96
Change : 0.36 or 0.4%
Wednesday, 4 August a.d. 2010
Today's quote for your pondering is:
"Whenever legislators endeavour to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from further obedience." John Locke, a.d. 1690.
Let's consider some technical events of the last week. The DOW IN GOLD DOLLARS (the Dow measured in statutory gold dollars or 0.048375 troy oz of gold) hit its correction high on 28 July at G$188.11 (9.1 oz). That is a 40.55% correction of the 25 March (G$205.10 or 9.921 oz) high to the 30 June low. (G$162.22 or 7.847 oz). Not only that, but it also kissed the 200 DMA on 30 July when the 200 DMA stood at G$188.36. This strongly hints that the DiG$ upward correction has ended, that a top in stocks draweth nigh, and that gold will now resume outperforming in earnest.
The GOLD/SILVER RATIO has for the past thirteen months languished in an even-sided triangle formation, trading tighter and tighter. Twice -- on February 2010 and in June -- the ratio threatened to threatened to break out upside, signalling disaster for both silver and gold. However, Monday and Tuesday of this week with ratio readings at 64.304 and 64.389 the ratio had broken down through the bottom boundary of that triangle. There's more, too: the Ratio stands below its 200 day moving average (65.12), its 50 DMA (66.58), and its 17 DA (66.20). That last, the fastest moving average, has already given us a warning peep that a big drop lieth in the near future. Now, these are the harbingers, the faint first beginnings of a down move, and as always, they must be confirmed by further movement in that same downward direction.
On 14 July 2010 the Houston Chronicle reported that the University of Texas Investment Management Company had invested 3% of its $22.3 billion in gold, about $669,000,000. UTIMCO manages endowment funds for Texas' higher education institutions, and is supposed to generate a 5.1% distribution yearly to UT and Texas AandM.
Oh, folks! Gold is moving into the mainstream.
Do yourself a favour and go to http://solari.com/blog/?p=8392 and spend ten minutes watching the news report Catherine Austen Fitts dug up on the use of the gold dinar and silver dirham in Malaysia. Those interviewed use precisely the arguments I would use for a silver and gold currency. Go watch it!
Now to today's markets:
My, my, my, this is the best of all possible worlds. Today stocks rose, the dollar rose, and gold rose. Reckon we're all going to get rich.
THE GOLD/SILVER RATIO rose today to 65.362. Silver and gold are out of synchrony, playing leapfrog. However, the ratio was due for an up-bounce, and will probably reach 66 before it stops, say, another day or two. You ought to be holding 70% silver and 30% gold in your portfolio right now. If you are too heavy gold, then swap some for silver right quickly.
The US DOLLAR INDEX rose 36 big basis points today and is now trading at 80.956. What appears to be a rounding bottom has emerged over the last three days. If that interpretation is correct, then the Dollar ought to break through 81 tomorrow and jump above 81.40, and it cannot trade below 80.80. MACD still hasn't turned up.
STOCKS are moving further and further out on a limb. Either they have topped or will make one more little push up. Future holds weeping and wailing, so stay away.
Silver and gold aren't speaking the same tongue today. Gold rose $8.50 to $1,193.70, playing catch up to silver. Meanwhile silver fell 14.4c today to close on Comex at 1826.3c. Notwithstanding silver's quirk today, gold broke down the $1,190 barrier, which was the 20 day moving average ($1,190.11). Right here at $1,195 there lies more resistance, but stronger still at $1,200 - $1,210. It's okay, gold has upward momentum. Tomorrow it might drop towards or below $1,190 for a last kiss good-bye, but as long as it doesn't close down there gold's elevator will still be headed for higher floors.
Silver ought to finish this little reaction tomorrow. Today's low was 1820c, and that could well mark its furthest extent. If it drops again tomorrow it must not drop below 1800c. Close above 1860c confirms upside breakout.
Bottom line today remains unchanged: silver and gold bottomed last week and have begun a new advance. It may move sideways to slightly higher through August, but will take off in September. Buy now, while silver and gold are still on sale.
On this day in 1693 Dom Perignon did NOT invent champagne, the sparkling white wine, although many give him credit for that. He did, however, greatly refine the winemaking science He was an early advocate of using only natural processes without adding foreign substances.
On this day in 1735 a New York jury acquitted printer John Peter Zenger of "seditious libel" charge brought by the royal governor. His acquittal -- by a jury -- laid the foundation for freedom of the press in North America.
On this day in 1892 Sunday school teacher Lizzie Borden was arrested in Fall River, Massachusetts and charged with the tasteless murders of her father and stepmother with an axe. She was acquitted, but the song persists, "Lizzie Borden took an axe/And gave her father forty whacks/When the job was nicely done/She gave her mother forty-one." So much for "innocent until proven guilty."
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.