Monday, November 29, 2010

The Gold Price Needs to Close Clean Through $1,366, then $1,380, to End Speculation

Gold Price Close Today : 1366.00
Change : 3.60 or 0.3%

Silver Price Close Today : 27.148
Change : 0.449 cents or 1.7%

Gold Silver Ratio Today : 50.32
Change : -0.711 or -1.4%

Silver Gold Ratio Today : 0.01987
Change : 0.000277 or 1.4%

Platinum Price Close Today : 1646.10
Change : -9.40 or -0.6%

Palladium Price Close Today : 690.00
Change : -3.30 or -0.5%

S&P 500 : 1187,76
Change : -1.64 or #VALUE!

Dow In GOLD$ : $167.26
Change : $ (1.02) or -0.6%

Dow in GOLD oz : 8.091
Change : -0.050 or -0.6%

Dow in SILVER oz : 407.12
Change : -1.52 or -0.4%

Dow Industrial : 11,052.49
Change : -39.51 or -0.4%

US Dollar Index : 80.81
Change : 1.020 or 1.3%

GOLD PRICE falls stall at $1,351 - $1,355, but it's rise stalls at $1,366. Yes, on Comex gold rose $3.60 to $1,366, but this means little. On lame trading days like last Friday, when nobody is home but the starveling black shirts on the exchange floor, they run prices up and down to hit the stops and put some extra change in their pockets. Thus Friday's close says nothing much. More to the point is a potential pennant or even-sided triangle on gold's longer term (14 month) chart.

O, mercy, what meaneth this? Even sided triangles are tight-lipped about the direction they will break out, up or down, but they do scream that a move is coming. A pennant is a special case of even-sided triangle, a continuation pattern that signals another move in the same direction the pennant built from. I can't say which this is, but looks like an even-sided triangle. Still, I cannot get out of my mind the suspicion that I might be wrong (that only happens seldom, as y'all already know) and gold might break down for more correction. The riddle will be answered by a gold close clean through $1,366, then $1,380, ending all speculation, or a close through the trap door at $1,350.

The SILVER PRICE continues to ride its 20 day moving average up. Today on comex silver snatched another 44.9c to end at 2714.8c, respectably above 2700c. Yet here, too, we find that even-sided triangle or pennant. In silver's case, it must close above the low 2700s and clear 2790c to signal an intention to climb. Any stumble below 2645c woulde send silver tumbling toward 2500c.

Truth is, I haven't a clue which way silver and gold will turn. It was strong that on a dollar market 100 basis points higher than last Wednesday, both silver and gold climbed. That's stout. Longer term I'm not concerned about silver and gold, but in the next few days we might get surprises.

My wife Susan had a pacemaker implanted successfully on Friday. She had no more than returned to the room after the procedure than she was already feeling better. She said she felt, "Crisp." I waited two days to ask what in the world that meant, and she said she had been feeling "soggy with fatigue." She chowed down like a shipwreck victim.

Catch is that she has a condition where her heart swings between beating too fast (tachycardia) and too slow (bradycardia). The pacemaker fixes the "too slow", but does nothing for the too fast. If that doesn't settle down, she will need medication. That sounds a little like "Fix one, break one", but I am so thankful that the pacemaker is helping her fatigue that I can live with that.

Susan's still awfully sore, since they sliced into her chest and squeezed in a pacemaker the size of a skoal can. Other than that, she's chipper as a cricket and now I only have to figure out how to keep her from driving, using a chainsaw, or lifting weights for the 30 day recovery period. Don't laugh. If you knew her you'd understand I'll probably need ropes and chloroform to keep her down.

I deeply appreciate your prayers on her behalf. Please don't stop just yet.

The markets had a weird day. The scrofulous euro continued dropping from last week, closing down 0.0114 (-0.86%) at 1.3119. Last five days look like a waterfall on that chart, with what may have been an exhaustion gap yesterday. Euro closed slap through its 200 dma (1.3147).

The US DOLLAR INDEX today rose 102 basis points to 80.81. In other words, the dollar cleared round-number resistance at 80 and pushed another 81 basis points higher, a right strong display. Ahh, but now the dollar index hath reached my first target, and it remains to be seen whether it will keep on rising.

STOCKS plunged early in the day as low as Dow 10,930, stayed there most of the day, then began climbing toward the close and ended at down only 39.51. Stopping at 11,052.49 (1,187.76 on the S&P500) still looked thin as a step-child's bread and butter. Once the Dow slips through that 11,000 mark the rats will not be climbing down the anchor chains, they will be leaping off the boat to swim for shore. Forestall some misery for yourself and stay out of 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.