Friday, November 19, 2010

As Long As The Gold Price Remains Above $1,330 It Won't Drop Further, But Early Next Week It Needs To Clear $1,366

Gold Price Close Today : 1,352.20
Gold Price Close 12-Nov : 1,365.40
Change : -13.20 or -1.0%

Silver Price Close Today : 2717.5
Silver Price Close 12-Nov : 2593.8
Change : 123.70 or 4.8%

Gold Silver Ratio Today : 49.76
Gold Silver Ratio 12-Nov : 52.64
Change : -2.88 or -5.5%

Silver Gold Ratio : 0.02010
Silver Gold Ratio 12-Nov : 0.01900
Change : 0.00110 or 5.8%

Dow in Gold Dollars : $ 171.27
Dow in Gold Dollars 12-Nov : $ 169.45
Change : $ 1.82 or 1.1%

Dow in Gold Ounces : 8.285
Dow in Gold Ounces 12-Nov : 8.197
Change : 0.09 or 1.1%

Dow in Silver Ounces : 412.27
Dow in Silver Ounces 12-Nov : 431.51
Change : -19.24 or -4.5%

Dow Industrial : 11,203.55
Dow Industrial 12-Nov : 11,192.58
Change : 10.97 or 0.1%

S&P 500 : 1,199.73
S&P 500 12-Nov : 1,199.21
Change : 0.52 or 0.0%

US Dollar Index : 78.480
US Dollar Index 12-Nov : 78.093
Change : 0.39 or 0.5%

Platinum Price Close Today : 1,666.20
Platinum Price Close 12-Nov : 1,680.70
Change : -14.50 or -0.9%

Palladium Price Close Today : 703.50
Palladium Price Close 12-Nov : 675.50
Change : 28.00 or 4.1%

Well, the week bloweth hot and cold out of both sides of its mouth. As day before yesterday, we have mixed closes in the SILVER PRICE and the GOLD PRICE for the week, not to overlook the PLATINUM PRICE and the PALLADIUM PRICE. Stocks are flat for the week, or, in English, remain in a downtrend. Dollar index made good its gains and although yesterday and today it fell, still it ended the week higher.

The metals have the feel of a late stage rally because silver is so much bouncier than gold.

The GOLD PRICE rose $16.10 yesterday but fell 70c today to close on Comex at $1,352.20. The five day chart seems to be a rectangular reversal on Tuesday and Wednesday, but today's trading violated yesterday's $1,346.60 low with a low at $1,341.25. That don't look so hot, especially gold's failure to clear $1,355 resistance. Somebody attacked gold about 7:00 a.m. Eastern time, and stepped up the pressure at the New York open, driving gold down to $1,341.24 by 10:00 a.m. But gold snapped back sharply jumping to $1,353 in a single bound (well, two or three bounds) and then spending the rest of the day meandering from $1,350 to $1,355.

Prime question on every mind is, Has gold bottomed or not? Well, it bounced off its 50 day moving average this week (1,336.22) which certainly qualifies as a likely bottom target. Today it touched its 20 DMA (1364) but all week long has failed to clear that first trigger of an upward reversal.

As long as gold remains above $1,330.00 it won't drop further, but early next week it needs to clear $1,366.00. Unhappily, next week is Thanksgiving week, usually a very light and quiet week in the US.

My guess is that gold has indeed bottomed.

The SILVER PRICE made a cattywampus upside down head and shoulders this week or rectangle reversal, then went hog stomping wild. Thursday it gained 132.3c [sic] then another 34.5c today. Today silver backed off clean to 2638, then turned and ran like a scalded dog for 2738c. That validated silver's victory over the 2650c resistance level. New overhead barrier is 2740c. Comex today closed up 34.5c at 2717.5c.

Silver is stronger than gold, and that shows up in the GOLD/SILVER RATIO which fell this week from 52.64 to 49.76. Our ratio swap at 47.50 can't be far away. For now I am still targeting 47.50.

I can only interpret silver and gold's performance this week as a preface to higher prices next week. Both remain on target for $1,600 and 3400c.

DOLLAR INDEX this week was battered by news out of the peeling European Onion that the Irish had finally agreed to lower themselves and accept boatloads and tankerloads of newly printed Euros to bail out their government and their banks. Those of us who yet retain two or three functioning brain cells scratched our pates, trying to figure out why news that the EU will print a gadzillion new euros made the currency strengthen rather than weaken on the market. Dollar is sorry but we only have to bail out California and New York, not Ireland, and not their banks.

Sanity notwithstanding, that's what happened. US Dollar Index peaked on Tuesday 16 November at 79.45 intraday. One presupposition that some chart analysts use who believe that markets "know" what will happen is that although events seem to "cause" a drop, in truth that event is only a catalyst or coincidence to a drop that was already in the offing. Just so the dollar this week. That 79.45 came at the end of a long climb, and some correction was due anyway. Yet whether the rumor of an Irish bailout or simply the dollar's overextension caused the fall, the correction was completed today with a V-bottom to 78.17 and climb back to 78.48 right now. That's a loss of 13.7 basis points, but on the chart that V-bottom looks like the head of an upside-down head and shoulders, with shoulders at 78.40. If that correctly reads the chart, then next will the dollar will climb again, never dropping below 78.40 and rapidly climbing through 78.80 and 79 for another challenge of 79.40. Long and short is that I am expecting more dollar rally, at least to the last intraday low at 80.08, maybe to the 200 DMA at 81.75 over the next three weeks. Beware, a close below 78.40 sends the dollar sliding toward 75.50.

STOCKS find it difficult to hold my attention. I've seen this painful wallowing before. Stocks remain in a downtrend but on Thursday amidst the general jubilation over Ireland's fix, they shot up. That might be a reversal, but the Dow must shoot through 11,200 to prove it. Today the Dow gained another 22.32 points to close at 11,203.55. The S&P500 still couldn't press through 1,200 but closed up 3.04 at 1,199.73. Y'all save yourselves some grief and stay away from stocks.

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.