Tuesday, November 30, 2010

The Gold Price Broke Out of It's Triangle Hitting $1,389.76 at Today's High

Gold Price Close Today : 1385.00
Change : 19.00 or 1.4%

Silver Price Close Today : 28.185
Change : 1.037 cents or 3.8%

Gold Silver Ratio Today : 49.14
Change : -1.177 or -2.3%

Silver Gold Ratio Today : 0.02035
Change : 0.000476 or 2.4%

Platinum Price Close Today : 1658.40
Change : 12.30 or 0.7%

Palladium Price Close Today : 697.00
Change : 7.00 or 1.0%

S&P 500 : 1,180.55
Change : -7.21 or -0.6%

Dow In GOLD$ : $164.27
Change : $ (2.97) or -1.8%

Dow in GOLD oz : 7.947
Change : -0.144 or -1.8%

Dow in SILVER oz : 390.49
Change : -1.79 or -0.5%

Dow Industrial : 11,006.02
Change : -46.47 or -0.4%

US Dollar Index : 81.33
Change : 0.491 or 0.6%

Today the market answered loudly and unequivocally my worries yesterday. The SILVER PRICE and the GOLD PRICE broke out of those triangles and . . . Well, I'll explain below.

Early this morning the GOLD PRICE had already cleared that $1,366 hurdle that was badgering me yesterday. Looking closer at the 5 day chart, gold had formed an up-pointing wedge, when then resolved upside. This is an odd thing about those upward wedges, and I saw it often in the 1990s in stocks. Wedges are supposed to break out in the opposite direction to the direction they point: upward wedges break down, downward wedges break up. However, in strong bull markets that don't always work. Over and over it will form an upward wedge and break out upwards. Of course, every once in a while, just to clean your clock and restore your humility, wedges break in the orthodox fashion.

Anyhow, gold hit 1389.76 at today's high. This clears the last intraday high ($1,382.30) and pierces the downtrend line from the 9 November intraday high at $1,424.40. As always, gold must now confirm its intention by closing higher still, I suggest above $1,400. Today it had risen $19.00 by the time Comex settled it at $1,385.00. That pretty well put to death my worries.

Whoa! The SILVER PRICE chart today looks even more enthusiastic than gold's. Once it cleared that 2730c resistance, it left a trail of dust clean to 2830c. Comex settled at 2818.5c, higher by a colossal 103.7c.

Listen here -- y'all are getting spoiled by this silver performance. This ain't normal, rising a dollar and more in a day. Yes, but it certainly points out silver's greater volatility, and how when money begins running for cover, it makes a much louder noise in the silver market.

Something's not right in the world. Silver and gold are simply ignoring the US dollar and climbing right along, thank you very much, right in the face of dollar strength against every other currency alternative. Remember that silver and gold are also alternative monies, offering the only hard alternative to every unbacked fiat money in the world. You are watching the de-coupling now, the world-wide revulsion against central-bank-created money out of thin air. Trouble is brewing, world-wide.

GOLD/SILVER RATIO dropped again today, with silver up percentagewise over twice gold's gain. My target for swapping silver into gold remains at 47.5 to one. Folks are getting all antsy about the ratio dropping further, and it certainly might, but once you set a target, assuming the reasons for the target haven't changed, it is a terrible idea to change that target. Then your greed and fear are pushing you, not your brain and reason.

Other folks are writing because they have been reading internet articles and interviews that in end-of-the-world fashion predict that all the silver in the world will disappear, probably by next week, and there certainly won't be any when we get ready to swap back into silver from gold 15 or so weeks after the peak.

Dearly beloved, let me be candid. The earth and its store of wonders was flung into space long ago, and altho one day 'twill disappear in a fiery flame, it probably won't happen next week, and anyway, that's not an event predictable enough to plan for. What I can plan for, I must, but not for the unknowable.

Likewise, I expect silver to rise about three and a half times as much as gold from here, but it ain't all gonna happen next week, or even soon. Nor will all silver disappear from the face of the earth. At some price, we will be able to buy it, until that fiery flame incinerates it all.

I know I'm throwing ice-water on somebody's alarmist Chicken Little parade, but I'm 63 and too old and battle-scarred for that mess. Tighten up your belt and be sober.

Took Susan up to Nashville to see the doctor today because she thought her incision site was swollen. Nurse said her problem is simply that she's skinny, so the device sticks out more than if she were fleshier. Nice relief.

First, look at that US dollar index. Today (I believe) it completed a move up from 79.60 begun last Thursday. That hints tomorrow 'twill move sideways or down. Dollar index cleared through the 80s and gobbled up 49. more basis points (0.63%) to end at 81.326. That solved my riddle about whether the buck would stop at 80 or 81. Right overhead hangs the dollar's 200 day moving average at 81.75, and y'all know that 200 DMA often serves as the upside target for a bear market rally. Lateral resistance lurks as well at 82, and at the last high (83.56 intraday). Dollar has now worked its way clean to oversold on the RSI (72.71), where 70 is oversold, although it shows no sign of stopping yet.

Euro is drowning. Lost 0.97 US cents today, down 0.74% to $1.2992. Yen fared little better, closing 83.645 yen, down 0.425 or 0.51%. The scrofulous dollar is cleaning their equally scrofulous plows.

Mercy, how glad I am I am not the Nice Government Men tasked with keeping the Dow afloat! That's a job for Sisyphus. Today the Dow plunged early to 10,946, then climbed to 1:30, fiddled, fell, and ended the day 46.47 poorer at 11,006.02. S&P500 gave up 7.21 to close at 1,180.55. When the Dow closes below 11,000, trouble will erupt. 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.