Wednesday, August 18, 2010

Only a Gold Price Close Below $1,210 Could Defeat This Rally

Gold Price Close Today : 1229.70
Change : 3.10 or 0.3%

Silver Price Close Today : 18.390
Change : (0.196) cents or -1.1%

Platinum Price Close Today : 1534.10
Change : 10.10 or 0.7%

Palladium Price Close Today : 491.85
Change : 11.85 or 2.5%

Gold Silver Ratio Today : 66.87
Change : 0.872 or 1.3%

Dow Industrial : 10,415.57
Change : 9.69 or 0.1%

US Dollar Index : 82.23
Change : 0.014 or 0.0%

The GOLD PRICE kept on slogging and hammering toward $1,230 resistance, closing up $3.10 at $1,229.70, almost past the blockers. It is now only a matter of time until the gold price pierces that veil, since gold has already established a new uptrend by closing above the last (July) low. Only a gold price close below $1,210.00 could defeat this rally.

Nobody likes to hear "I told you so" but today I have to say, "I told y'all so." Yesterday I said the SILVER PRICE must either burst through $18.60 or fall back -- no sideways option. The silver price fell back to an $18.15 low, but since that completed the short correction, it then reversed its way back to $18.39.

Behold the disagreement between SILVER and GOLD PRICES, gold up, silver down. Both markets are confused and bewildered as they try to force a passage through stiff resistance at $1,230 and $18.60
What meaneth this bafflement? On the dark side, it could mean that demand for silver and gold are faltering and further downside, even sharper downside, lurks ahead. On the bright side, it might be no more than the pangs and struggles of beating strong resistance.

Always draw to the hand with the greatest odds. Odds are an uptrend in force will continue in force. Also, silver and gold prices are in a primary uptrend (bull market) and bull markets more than half the time resolves such impasses by moving up.

Today saw the US dollar index flattening out its falling trajectory and curving up. It fell today only 1.4 basis points, and now is trading at 82.25. Low appeared at 81.912, so as far as I can tell the correction was completed today and support around 82 successfully defended. 'Twasn't quite a key reversal (break to new low with higher close for the day) but still revealed strength by closing 31 basis points higher than the low. Buck is headed higher, meseemeth.

The DOW gained a measly 9.69 points to close at 10,415.54, S&P500 rose to 1,094.16. No big shakes to this rally, and at 10,600 it ought to run slap out of gas, like the Wehrmacht at the Battle of the Bulge.

A symptom of the struggle raging between stocks and gold is seen in the DOW IN GOLD DOLLARS. Gold edges up, stocks edge up, the DiG$ remains around G$175 (8.466 oz). Breaking that level will be followed by lethal and blitz-fast downside.

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.