Wednesday, September 01, 2010

The Gold Price Remains Above $1,235-1238, Which is What's Needed to Stay in the Rallying-Game

Gold Price Close Today : 1244.20
Change : (4.10) or -0.3%

Silver Price Close Today : 19.327
Change : (0.055) cents or -0.3%

Platinum Price Close Today : 1536.00
Change : 8.00 or 0.5%

Palladium Price Close Today : 520.00
Change : 115.00 or 28.4%

Gold Silver Ratio Today : 64.38
Change : -0.029 or 0.0%

Dow Industrial : 10,269.47
Change : 254.74 or 2.5%

US Dollar Index : 82.47
Change : -0.631 or -0.8%

The GOLD PRICE advanced steadily overnight to $1254, then was, quite literally, slammed on the US open. Selling must have continued until 11:00 when it stopped at $1,243. Comex dropped off $4.10 to $1,244.20.

This comes as no cosmic surprise. Whoever the short sellers are -- and I forbear to name names lest I earn the dread title "conspiratorialist" which the Establishment and its scabby yellow cur running dog media use to describe anyone who disagrees with them -- would logically counterattack before the gold price makes a new all-time high. Heavens, even if it were only short sellers off the street, they would do the same. Yet the gold price remains above $1,235-1238, which is what's needed to stay in the rallying-game.

The SILVER PRICE chart looks like gold's, only better. Critical here is the silver price holding on above $19.20. You have to expect strife at old highs. Silver followed the same pattern as gold, running into mystery sellers on the open. Low came at $19.252, and Comex closed down 5.5c at $19.327.

These closes today aren't bad numbers for silver and gold prices, but remember that when you are advancing, you must keep on advancing. You can't bumble and pause long, or you stumble.
September is often a very good month for silver and gold prices. I remember 1979, when the silver price finished August about $10.00 or maybe $12.00 and by 21 January 1980 stood at $50.00. The gold price didn't slouch, either.

Stocks made me look like an idiot today, but that's okay. First, it's not hard to do, and second, I only have to wait a little while and they will drop again, making me look like an investing genius. That's the advantage of investing with the primary trend: the trend will bail out your worst timing mistakes. That 15-20 year trend is DOWN for stocks, and as time wears on, that bear will pull them down. Oh, there will be, as today, flashes of hope -- "better manufacturing news in China and the US pointed to global recovery" -- but these serve only for the bear to lure more victims into his den, there to sit until he decides to maul them.

I did, however, seriously misidentify where stocks were in their present downtrend. So where are we now? Stocks today hit their 50 day moving average (10,260) rising 254.74 and closing at 10,269.47. S&P performed similarly, rising 30.96 to 1,080.29. Twenty DMA stands at 10,300, and today's high was 10,279.08. Clearly that old resistance at 10,300 has lost none of its strength.

Odd look to today's chart, though. Lifts straight up off the open, but from about 10:00 until close doesn't move 50 points -- flatlines. Is that a complete exhaustion of buying power, or big sellers stepping in toward 10,300? Or merely a very thin market, with very nervous shorts? Whatever the cause, it is not normal trading.

Aiding stocks' rise was a weak dollar today. It made a low today at 82.194, and dropped for the day a sizeable 63.1 basis points. Trading now at 82.468. Overnight the dollar eroded from 83 to 82.2 at today's open, then bounced a bit but could reach no higher than 82.50. Today's fall took the dollar below its 20 DMA (82.37). The 200 DMA stands at 81.30, a mere 115 basis points below.

This no longer looks like a rally, unless the dollar is about to make a second touch (1st was in August) to the 200 day moving average before rallying. The dollar has been boxing here with its 50 DMA (now 82.95), unable to knock it down. The jury is still out on the dollar, but don't look for higher prices tomorrow.

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.