Friday, November 12, 2010

Gold Price Correction to $1,323.95, Take Advantage and Load your basket down with Gold and Silver at Momentarily Reduced Prices

Gold Price Close Today : 1,365.40
Gold Price Close 5-Nov : 1,397.30
Change : -31.90 or -2.3%

Silver Price Close Today : 2593.8
Silver Price Close 5-Nov : 2674.4
Change : -80.60 or -3.0%

Gold Silver Ratio Today : 52.64
Gold Silver Ratio 5-Nov : 52.25
Change : 0.39 or 0.8%

Silver Gold Ratio : 0.01900
Silver Gold Ratio 5-Nov : 0.01914
Change : -0.00014 or -0.7%

Dow in Gold Dollars : $ 169.45
Dow in Gold Dollars 5-Nov : $ 169.31
Change : $ 0.15 or 0.1%

Dow in Gold Ounces : 8.197
Dow in Gold Ounces 5-Nov : 8.190
Change : 0.01 or 0.1%

Dow in Silver Ounces : 431.51
Dow in Silver Ounces 5-Nov : 427.91
Change : 3.60 or 0.8%

Dow Industrial : 11,192.58
Dow Industrial 5-Nov : 11,444.08
Change : -251.50 or -2.2%

S&P 500 : 1,199.21
S&P 500 5-Nov : 1,225.85
Change : -26.64 or -2.2%

US Dollar Index : 78.093
US Dollar Index 5-Nov : 76.602
Change : 1.49 or 1.9%

Platinum Price Close Today : 1,680.70
Platinum Price Close 5-Nov : 1,767.50
Change : -86.80 or -4.9%

Palladium Price Close Today : 675.50
Palladium Price Close 5-Nov : 684.45
Change : -8.95 or -1.3%

The GOLD PRICE got rode hard and put away wet today. Once it breached that $1,385 line in the ground all the guards starting shooting. Gold tried to rise after the New York open, reached $1,395, then ran for cover, hitting $1,379.5 by 12:30. Comex close came at $1,365.40, $37.70 lighter than yesterday. Gold has since levelled off between $1,365 and $1,370.

Whither gold? From the 9 November high, assuming that Gold is correcting its July - November move, a 20% correction would reach $1,361.52. That target was reached today. A 38.2% correction would reach $1,317.59, and a 50% correction would reach $1,289.10. I state no opinion here, I only crunch numbers. That $1,360 level also sports strong lateral chart support, as does $1,315. I would be really surprised if gold reached $1,289.10 (that is an opinion.) The 50 DMA also offers another echo at $1,323.95. 20 DMA stands at $1,361.82. Now, I've thrown all the eggs into the bowl -- y'all stir them up and pick out whichever one you like.

The SILVER PRICE was innocently walking down an alley when a mob of muggers jumped out of the corner at 2650c and commenced pounding silver's head with a tire iron (in some parts of the South pronounced "tar-arn.") That happened in broad daylight, around 10:45, and they knocked silver clean to the ground and down a manhole, all the way to 25.77. Silver managed to gather enough strength to climb out of the manhole and crawl along the pavement between 2585c and 2620c. On Comex it closed down a massive 146.3c at 2593.8c.

From July to 9 November 2010 silver rose from 1742.3c to 2890.2c, 1147.9c. Whew. Think about that. The chart shows lots of lateral support around 2500c and the 20 DMA lieth also there at 2497c. 50 DMA stands at 2288c. A 20% correction lands silver at 2660.6c, a little above today's activity. A 38.2% correction reaches 2451.7c. A 50% correction would reach 2316c.

Now for an opinion, a plethora of which I always go armed with. Looking at the chart, that 2500c jumps out and grabs your eyeballs. If today marked not the bottom of the move, then 2500c will surely contain it. Bear in mind that silver, as a smaller market, is always more volatile than gold. That's what makes life interesting.

Now let us ponder this week's markets. Behold, the gold and silver chickens flew off the roost this week, extending their correction. US dollar appears to have turned up, and stocks are turning down and wallowing in the Slough of Despond, Bubba Bernanke notwithstanding.

Before the weekend many traders close out positions, taking profits and flattening positions so they can enjoy their martinis on Long Island over the weekend -- thus the dollar's behavior today, losing 12.4 basis points (0.16%) and trading to 78.093 after a very strong week. Move started at 76.6 and moved to 78.09, adding 149 basis points. By closing above 77 and then 78, and its 20 day moving average, the dollar has confirmed, re-confirmed, and re-re-confirmed its reversal. Likely targets overhead lie at 78.77, the 50 DMA, the 80, the last low, then 83.56, the last high. 200 DMA also has a bull's eye on it at 81.79. The lower the dollar reaches, the weaker we will know it is. After such a long fall (83.56 - 76.14) so re-bound, even the meaningless writhing of a snake you ran over with your Ford pickup, is inevitable. Me, I'm laying my bets on 80 at least.

What is a "downtrend"? That is a series of lower highs and lower lows. What has the stock market been doing the last six days? Making lower highs and lower lows. Even my public- school educated logic tells me that is a downtrend. But then, does that surprise anyone other than stockbrokers, Wall Street, and TV and NPR pundits? All the rest of us know that PRIMARY DOWN TRENDS (those that last 15 - 20 years) always resume their gravity-led trajectory after brief bear market rallies. And stocks are in a primary downtrend that will last until 2015 or 2020. See now why I shun stocks?

Today the Dow lost 90.52 points to close at 11,192.58 S&P 500 lost 14.33 points to close at 1,199.21.

Lift up your eyes to the horizon, and call to mind the SILVER and GOLD PRICE performance the last nine years: 'tis a bull market, and a bull market it remains. Take advantage of this opportunity to load your basket down with gold and silver at momentarily reduced prices.

One little prayer request: my wife Susan has to have a pacemaker implanted on 26 November. I would deeply appreciate your prayers for her.

Y'all enjoy your weekend.

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.