Monday, August 23, 2010

Look to Buy Gold this Week

Gold Price Close Today : 1226.10
Change : (1.10) or -0.1%

Silver Price Close Today : 17.925
Change : (0.057) cents or -0.3%

Platinum Price Close Today : 1510.00
Change : -4.00 or -0.3%

Palladium Price Close Today : 486.00
Change : 8.00 or 1.7%

Gold Silver Ratio Today : 68.40
Change : 0.156 or 0.2%

Dow Industrial : 10,174.41
Change : -39.21 or -0.4%

US Dollar Index : 83.12
Change : 0.013 or 0.0%

I've been squinting at the calendar for the last couple of weeks, eying 26 August when options expire. The manipulators like to engage other speculators and dealers who also have an interest in selling silver and gold down. James Turk captured the dynamic in the article at

"If someone were manipulating the silver market, you would see exactly
what has actually occurred in silver over the past several days.

"To manipulate the price you would use your buying power and accumulate long positions until you force silver above resistance in the high $18.40s and thereby trigger all the buy-stops sitting there, including the one we placed. You would then sell your long positions into those buy-stops and keep selling until (1) you became short and (2) your selling drove prices lower.

" I have just described exactly what has just taken place in silver. What we have seen is a classic textbook case of market manipulation. We have seen it so many times before in recent years, it is the reason I warned on 18 August: “Let’s see if silver can hold this level, particularly particularly with option expiry coming soon.”

"I expect that we will see the rest of this repetitive pattern of manipulation play out over the next few days until this month’s options expire. I also expect that silver will remain under $18 during this period.

"There may in fact be another bout of selling pressure by the shorts to shake out some more weak-hands. It would give the manipulators an even bigger profit when they buy back on even lower prices the short positions they established on the breakout above $18.40. Consequently, I will not be surprised if the 2-year uptrend line in the following chart is broken this week.

"I don’t think that uptrend line will be broken, but don’t panic if And don’t be distracted from the big picture – both technical and fundamental." Now, think a minute. If manipulators are driving prices down temporarily this week, what should we, as long term silver accumulators, do? Right, take advantage of lower prices to buy.

One more item: a reader asked me to discuss what effect that mid-term elections might have on the silver and gold markets. Answers: None. I have to deliver bad news: the American system -- financial, political, monetary -- is broken beyond repair. Beyond tinkering. Beyond reform. Beyond electing conservatives, liberals, Republicans, Democrats, libertarians, or even Archangels. No election will make a dime's bit of difference until somebody runs on a platform of abolishing the Federal Reserve and cutting off welfare to corporations and banks. Until you see that discussed, stay your course. Nothing will change whoever's elected.

Today's markets:
US DOLLAR INDEX marked time today, rising 1.3 basis points to 83.124. It has reached the top of its Bollinger bands. Those are bands drawn above and below the 20 day simple moving average at two standard deviations. Statistically, in a normal distribution, 68% of the observations will lie within one standard deviation of the average; 95% within 2 standard deviations, and 99.7% within 3 standard deviations. In 12 days the dollar index has moved from the bottom of its Bollinger bands to the top. Also lurking above is the 50 day moving average (83.35). Dollar index will probably push higher before another correction, but 'twill be uphill slogging. Dollar is still headed up, targeting at least 85, and maybe 90.

Today stocks feebly stretched out a finger to touch the 50 DMA (10,302), then fell back on the couch, exhausted and closed near the low. Stocks fell 39.21 to Dow 10,174.41, while S&P500 closed 1,067.36, down 4.32. In my raggedy opinion, stocks are now entering the third leg down of their present decline which will carry to at the very least 10,000, and more likely 9,700 - 9,600. Stop your ears to the sirens and pimps of Wall Street, and sell all stocks.

SILVER's closing price from Friday was wrong, as I suspected. It dropped 33.6c to 1798.2c, and today dropped another 5.7c to 1792.5c. Today's graph was flat, with a high at 1806.1c and a low at 1787c. The 200 DMA stands at 1776c, then we have all those bottoms lined up at 1735c, 1757c, 1722c, 1743c, and 1708c. If silver sees any of those prices, it will happen this week. Buy silver with an eye to Options Expiry on Thursday, August 26. That is, if you haven't bought before Thursday, look to do so on Thursday. Magic number is 1800c because loads of call options are there and above.

GOLD has now twice, Friday and today, made lows at $1,222. Today it closed down $1.10 at $1,226.10. Before the week's out look for gold to drop to $1,218 or $1,210. Only a close above $1,235 would change that outlook. Look to buy gold this week.

Will trade for silver or gold: My daughter needs a vehicle, but it must be tough enough to stand up to our gravel roads and big enough to seat six, namely, her, her husband, and her four boys. She's thinking of a Toyota Land Cruiser or an Isuzu, and will spend around $5,000, maybe a bit more. I have learned that y'all, my readers, can answer every question in the world, so I know somebody has an answer for this one. Please contact Liberty Bain at [email protected] Note that she would not be interested in anything that needs major resurrection work, laying on of hands, or a new body.

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.