Tuesday, August 24, 2010

If the Gold Price Closes Above $1235 Stop Waiting and Buy Gold

Gold Price Close Today : 1231.00
Change : 4.10 or 0.3%

Silver Price Close Today : 18.369
Change : 0.386 cents or 2.1%

Platinum Price Close Today : 1518.00
Change : 8.00 or 0.5%

Palladium Price Close Today : 487.00
Change : 1.00 or 0.2%

Gold Silver Ratio Today : 67.02
Change : -1.210 or -1.8%

Dow Industrial : 10,040.45
Change : -133.96 or -1.3%

US Dollar Index : 83.14
Change : -0.119 or -0.1%

Just about the time you believe you have markets scoped out, they do the opposite of what you expect.

Oh, I don't mean the dollar index or stocks. The dollar index fell a measly 11.9 basis points to 83.137, 0.17%, a meaningless jiggle. Dollar couldn't pierce 83.55, and fell sharply to 82.85, then consolidated. However, remember that yesterday we saw it knocking against its top Bollinger band and its 50 DMA, so there's no surprise or intermediate term trend change here, merely a predictable correction.

And stocks? They fell 133.96, 1.32% to 10,040.45, hovering above the psychologically-magical 10,000 after making a low at 9,991. S&P 500 lost 7.08 to close at 1,051.87. Y'all know that when stocks break that 10,000 mark investors will panic, and panickers sell, so the fall will feed on itself, like a California brush fire. Stay away from stocks.

But silver and gold prices refused to behave as they ought in an Options Expiry week. Options expire on Thursday, but both rose to the top of their trading range: silver rose 38.6c to 1836.9c and gold rose $4.10 to $1,231.00. Perhaps to pull in more suckers?

GOLD was smashed down to $1,210 on the opening and simply refused to stay there. It shrugged that off and flew straight up to $1,235, then leveled out flat around $1,230. 'Twasn't supposed to do that, but then, the market tells me I don't tell the market.

Look objectively at the chart. Tear off the label on the top. What sayeth the chart? It says gold is at the top of the range, and you wait to buy it until it breaks out. You may end up paying a little more, but you won't buy it and watch it drop back to $1,200 at least. I guessing gold will post one more leg down, maybe not to $1,210, but one more down anyway. On the upside, if it closes above $1,235, stop waiting and buy it.

SILVER clearly had a bunch of buy-stop orders sitting at 1800 or 1805c. Low was 1775 just after the open, and then silver popped up like a basketball held under water in a swimming pool, clear to 1843c. It closed near the top of that range at 1836.9c, but recall that 1777c was the 200 day moving average.

Because silver stands at the top of its trading range, I would rather wait for that one more wave down that confirms the downmove is complete. However, if silver trades (not closes!) above 1870c, I would buy it because if it trades above there it will close above there, and very little resistance stands above 1870c. That means, if silver clears that barrier, it will run like a scalded dog.

On this day in 1857 the New York branch of the Ohio Life Insurance and Trust Company failed, precipitating one of the most severe economic crises in US history. Bankers restricted transactions, and panic broke out in stock and financial markets that lasted for several months.

'Twas the same old story we know so well, bust of a boom created by bank overlending. Foreign capital fled the US, grain and cotton prices fell, goods inventories mounted up, and a railroad building bubble burst and lines defaulted on debt. Land bubbles hat had followed the railroad lines also burst.

Worse still, the SS Central America transporting $2 - $4 million in gold from the San Francisco mint, sank in a hurricane on 11 September, sharpening the liquidity crisis. The crisis climaxed on 14 October 1857, Suspension Day, when banking in New York and New England was suspended. In the aftermath economies around the world and in the US contracted.

The Central America wreck was located on 11 September 1987 and the total value of the recovered gold estimated at $100 - $150 million. The discovery wrecked the market for 1857-S double eagles, which until the salvage had been fairly rare, but not afterwards.

Today let's think about egg recalls, and how your rulers parley them into more power for themselves, and worse food for you.

The regulators whine and moan about the health dangers, they need more power, everybody's gonna die or at least be badly disfigured, etc., etc. Wave the bloody shirt of grotesque possibilities. All this helps them pass a new "Food Safety Bill", which will make the world safe for gigantic agribusiness corporations. At the same time it will tighten the screws on, and put out of business, thousands of small, clean farming operations.

Note the blame shifting, essential ingredient of this tactic: the eggs are guilty. Not the factory farming Confinement Animal Feeding Operation (CAFO) technique that crowds 25,000 animals together, or de-beaks and cages chickens so tightly they can barely turn around, and then must needs pound the antibiotics down the chickens' throats to keep them alive in such filthy and crowded conditions. Whoops! All those antibiotics also breed SUPER-salmonella, resistant to almost all antibiotics, as a side benefit riding on your factory farmed eggs.

Meanwhile, your small, local farm selling eggs has none of these problems, because their chickens run in pasture, and do what chickens do, scratching and eating bugs with a little grass as a garnish. Whoa! Could that protein their bodies naturally desire be the reason why yard eggs have yellow yolks that stand up proudly, as against CAFO eggs that slouch with shame, so white are their yolks?

Friends, it's the same with your milk, dairy products, and meat. The job of government regulation is to stifle all competition against the corporations, although they carefully masquerade as protecting you against the health dangers their own methods create.

Is this a great racket, or what?

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.