Tuesday, November 16, 2010

9 November Gold Price Tops Began a Correction Within a Move That Will Carry Gold to $1,600 by March

Gold Price Close Today : 1338.30
Change : (30.10) or -2.2%

Silver Price Close Today : 25.229
Change : (0.859) cents or -3.3%

Gold Silver Ratio Today : 53.05
Change : 0.593 or 1.1%

Silver Gold Ratio Today : 0.01885
Change : -0.000213 or -1.1%

Platinum Price Close Today : 1642.80
Change : -26.70 or -1.6%

Palladium Price Close Today : 644.45
Change : -24.05 or -3.6%

S&P 500 : 11,788.34
Change : -19.41 or -0.2%

Dow In GOLD$ : $170.28
Change : $ 1.07 or 0.6%

Dow in GOLD oz : 8.237
Change : 0.052 or 0.6%

Dow in SILVER oz : 436.95
Change : -6.92 or -1.6%

Dow Industrial : 11,023.81
Change : -178.47 or -1.6%

US Dollar Index : 78.62
Change : 0.566 or 0.7%

The GOLD PRICE broke through the trap door at $1,355 and never stopped falling till it hit support at $1,329.80 right before noon, then double bottomed. at the same price just before 1:00 p.m. It began drifting up but Comex still settled down only (!) $30.10 at $1,338.30. In the aftermarket gold strengthened, if from no other source then from dealers covering shorts.

The GOLD PRICE touching $1,317.60 would make a 38.2% correction of the July - November move, and 38.2% is a frequently observed correction. The equivalent correction would carry the SILVER PRICE a little lower, to 2452c. What drop we've seen so far might suffice, and that little double bottom today implies gold found firm support at $1,330.

The SILVER PRICE chart didn't play out quite like gold's. It broke support at 2550c, then dribbled down to 24.98 at noon. That low inspired buying that floated silver up barely over 2550c. On Comex silver closed 85.9c lighter than yesterday at 2522.9c. Since then it has oscillated around 2540c. Again, today may have been correction enough to have sated silver's appetite for correction, but recall that strong lateral support stands at 2490c - 2500c. To confirm a turnaround silver must close above 2555c. By the way, the 20 DMA stands at 2511c, so I would class today as bouncing off the 20 DMA, which has been catching silver since last August.

My opinion hasn't changed: 9 November tops began a correction within a move that will carry gold to $1,600 by March, not a major peak.

Okay, I never do this, but the case is desperate enough to force me to desperate measures.

The US Senate this week is voting on cloture on S. 510. This piece of sorry Bib Brotherism is clothed in lies, beginning with its name, "The Food Safety Bill." It would expand Food and Drug Administration authority over processed and fresh food, and to impose more bone-headed, tyrannical regulations on small farmers. Whole point of this monstrosity is to make the world save for Agribusiness and Giant Food Corporations, and to squelch all their small farmer competition. Oh, and don't forget protecting Big Pharma by reducing our access to dietary supplements. I have heard that S. 510 purports to regulate even food produced from your own garden and criminalize seed saving.

What can you do? Call your senators, both of them, at (202) 224-3132. Tell them to KILL (as in slay utterly) S. 510, The Food Safety Bill. In your own words tell them that you oppose this bill and that it will crush freedom and nutritious food production in America. Tell them you will be watching how your senator votes on this bill and that you have a long memory that stretches from election to election.

A rising US dollar is giving silver and gold bad toothaches. Today the nasty dollar rose 73.1 basis points, nearly 1%, and is now trading at 79.249. Once the buck pierced 78.70, it sprang in one tall bound to 79.40. That shouldn't have surprised y'all.

Yesterday I made a bad typo, one I often make, typing "not" for "now". I wrote that the dollar "hath not reached its 50 DMA (78.62)" when I meant "hath now reached." Once it cleared that 50 DMA, it jumped. That's what you saw today. That leaves the next target as the August intraday low at 80.08, and the 200 DMA at 81.77. Meanwhile, the Euro is sinking like the balance in your bank account when your brother-in-law borrows your debit card. The euro has now dropped below its 50 DMA (1.3640), so it must either turn around quickly, or continue sinking toward its 200 DMA at 1.3158, or August high at 1.3334.

Only reason to bother looking at the nasty Euro is to guess therefrom what the dollar might do. As long as the Euro is plunging, the Dollar Index will keep on rallying. When it looks ready to turn around, we can begin suspecting that the dollar's rally will stop.

Bear in mind the new limits the dollar has set today. A fall below 78.60 takes the dollar lower, a rise above 79.40 buoys the dollar higher.

STOCKS insist on falling and falling. Today's fall was serious. Dow plunged 178.47 to 11,023.81 while the S&P 500 tumbled 19.41 to 1,178.34. That brings the Dow to psychologically weighty 11,000 mark, as well as the 50 DMA (10,966.27). The MACD momentum indicator is falling, faster every day, and the RSI says, "Let me drop further!" Given that the stock market generally turns around very slowly, there's a good chance we might see a bounce off the 50 DMA before the final plunge through it. Maybe that will be the Santa Claus rally this year, giving gifts to all those money managers who need to clean up their performance before year-end. Stay out of stocks.

On this day in 1798 Kentucky became the first state to nullify an act of Congress, the Alien and Sedition Act passed by the Federalist congress to stifle criticism. Nowadays we don't do nullification because we don't have any state legislatures with any courage to speak of. Well, with a few notable exceptions.

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.