Wednesday, August 25, 2010

Most Likely Track is for the Gold Price Uptrend to Keep On Rising

Gold Price Close Today : 1240.10
Change : 8.30 or 0.7%

Silver Price Close Today : 19.022
Change : 0.653 cents or 3.6%

Platinum Price Close Today : 1532.00
Change : 14.00 or 0.9%

Palladium Price Close Today : 497.00
Change : 10.00 or 2.1%

Gold Silver Ratio Today : 65.19
Change : -1.866 or -2.8%

Dow Industrial : 10,060.06
Change : 19.61 or 0.2%

US Dollar Index : 83.27
Change : -0.044 or -0.1%

Today neither silver nor gold were bashful about declaring which direction they are headed, but more of that below.

Mark ye well that the dollar's movement had naught to do with silver or gold's rise today. The dollar jigged up and it jigged down, but within the 82.85 - 83.50 range that has held it captive these two days past. Dollar has built an even-sided or perhaps flat-topped triangle that most likely will break out upside.

In this day's trading it dropped a meager 4.4 basis points to trade now at 83.268. The 50 DMA at 83.30 no doubt blocked its way. Higher dollar coming, but it clearly isn't annoying silver and gold at all, or dogging their steps.

Lo, watch and recall! Y'all have never seen a market any phonier than today's Dow. Until 2:30 it remained deep in the red, falling as low as 9,938. But wait! Are those the hooves of the Nice Government Men's cavalry I hear in the distance? What remained down all day suddenly moved to unchanged, and even rose 19.61 for a Dow close at 10,060.06. Whew! At least it didn't close below 10,000. Good save, Nice Government Men, but a tadge corny -- and obvious. S&P 500 closed up 3.46 at 1,055.33. My view is that stocks are beginning a third wave down that will shave off another 15% from here. Stay away from stocks.

The GOLD PRICE closed at $1,240.10, up $8.30. This was a solid gain added to yesterday's rise, and prelude to higher prices. Now the dollar stands flat-footed on $1,240 resistance and it is possible it could dawdle a day or so here, or even fall back a little. However, the most likely track, since gold has already surmounted its July low, is for the uptrend to keep on rising. For me the suspense is ended. I bought today, and will buy more if it rises higher tomorrow. No more waiting.

Beloved SILVER added today that missing ingredient, that one last confirmation to an uptrend: it rose 65.3c to close not only above 1870 resistance, but above 1900c at 1902.2c. I told y'all that very little resistance lay between 1870c and higher prices. Today silver showed y'all how a scalded dog runs: fast. I bought.

(Something funny showed in silver futures settlement prices today. August silver, which ought to close lower than any other month, closed at 1902.2c, yet that was higher than December, withch rose 53.2c to close at 1896c. Technically that is called a "backwardation" when the near by months show a premium to the more distant months. Distant months' prices reflect the cost of carry, and ought to be higher. When they are not higher, it can indicate a severe shortage of physical metal, also called a "short squeeze." I am not calling it that, only observing that technical backwardation today.)

Silver might linger here a day or two to catch its breath, but what difficulties lie above us? Very little resistance, just the June high at 1946c and the May high at 1981c. When silver clears that last price, the only the 2008 high at 2068.5c will remain to block its path.

Yes, yes, 'tis still possible silver and gold might fall back, but most all the odds fall on the side of higher prices.

That said, tomorrow is Options Expiry, so you can expect the Bad Boys to be out in force, trying to work the market down so all those calls they’ve sold above 1800c and $1,200 will expire worthless. No matter what happens, I don't think they can break this market tomorrow, but I watch.

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.