Thursday, August 19, 2010

The Gold Price Still Has Hurdles at $1,240 and $1,255

Gold Price Close Today : 1233.40
Change : 3.70 or 0.3%

Silver Price Close Today : 18.318
Change : (0.072) cents or -0.4%

Platinum Price Close Today : 1524.00
Change : -10.10 or -0.7%

Palladium Price Close Today : 483.00
Change : -8.85 or -1.8%

Gold Silver Ratio Today : 67.33
Change : 0.465 or 0.7%

Dow Industrial : 10,271.21
Change : -144.33 or -1.4%

US Dollar Index : 82.47
Change : 0.168 or 0.2%

The GOLD PRICE rose today and the silver price fell slightly, but the whole day felt weasely -- sickly and unenthusiastic. Yes, yes, the gold price bested $1,230 resistance by rising $3.70 to $1,233.40, but it was stopped cold at $1,237. On a rise like this it ought to show greater exuberance. The daily chart makes me suspect that today marked a top in a small wave up, and that gold sank back exhausted. If that's true, tomorrow it will move toward $1,218. Above us still stand the hurdles at $1,240 and $1,255.

The SILVER PRICE also makes little sense today. First, it sank 7.2c to 1831.8c while the gold price rose, never an optimistic sign. It started out well with a rise to 1855c, but by 11:30 was at 1820c, nearly as low as yesterday's low. Off that low silver climbed but to 1834, then vibrated the rest of the day from 1834 - 1825c. This has the feel of a rounding top. Silver needs to pull out and surge above 1860c, or the wear of this back and forth will send it lower for another dunking.

I love it! I love it! The whole world is stark, staring mad as a hatter, and getting madder all the time! Today Standard and Poor issued a report by their economic "egg-spurts" that said "The US can avoid deflation if the Federal Reserve moves quickly and decisively to expand the money supply." This is Keynesian stupidity on steroids and growth hormones. Where do you start in correcting such a monster? Their definition of "deflation" is falling prices, not the correct "decrease in money supply." Their "cure" is like giving a pneumonia victim a cocktail of cholera germs, with a side of Bubonic plague. Ahh, but my friends, this is what we will get, because this is the same old media operating blindly or willfully for the Federal Reserve in managing inflation expectations. When you have to inflate the money supply by trillions and trillions, you also must have some air cover to prevent all the booboisie from catching on, and what works better than a deflation scare? Because I can still laugh, I need not weep.

Today stocks -- scared, no doubt by mythical deflation, or, alternatively, sinking beneath a killing load of debt and malinvestment -- sank by 144.33 points or 1.39% to Dow 10,271.21. Actually, that wasn't too bad, considering that at one point it was down 200 points. S&P fell 1.69% or 18.53 points to 1,075.63. I've been thinking about stocks today and don't see how they can avoid sinking lower than 6,450 before they bottom. Meaningfully lower. Stay out of stocks.

The US DOLLAR INDEX, buoyed, no doubt, by deflation fears, rose 0.22%, 16.8 basis points to 82.465. Significant is not the size of the rise, only that it rose. Five day chart is very choppy, but there are V-bottoms at 82 both Tuesday and today, with a lower 81.90 low yesterday -- in other words, something like an upside-down head and shoulders which should mark the end of the correction and beginning of a rise. Next target is 85.

By now y'all know I seldom get announcements right the first time round, and the Bodacious Hoedown Announcement was no exception. Add this: (1) Please R.S.V.P. by email to or call (888) 218-9226. Otherwise, we won't know how many to cook for. (2) Primitive (and I do mean "primitive") camping will be available Saturday night for those brave souls who desire it.
Here's an investment recommendation you won't hear often: buy a milch cow or goat. Sounds silly? Think again. A milch animal yields delicious milk daily which you can drink, pour over cereal, or culture for yogurt, clabber, kefir, cottage cheese, or other cheese. If you have digestive problems or food allergies, raw milk, especially raw goat's milk, will probably help. And, if you have children, you can teach them diligence, independence, and responsibility milking that animal and processing the milk. Yeah, y'all think I'm crazy, but only if you have not yet experienced the joys of raw milk. This is the sort of stock investment I can wholeheartedly recommend. I like the LaMancha and Nubian goats that give very mild milk -- stay away from the Toggenbergs unless you like the flavour of goat. No cow can compare to the cream-abounding Jersey or Guernsey, and eschew Holsteins, they give troublesome type A1 milk.

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.