Monday, November 22, 2010

It Appears That the Gold Price Correction From the 9 November Peak Has Ended and Reversed For Confirmation Gold Needs To Close Over $1,365

Gold Price Close Today : 1357.70
Change : 5.50 or 0.4%

Silver Price Close Today : 27.457
Change : 0.282 cents or 1.0%

Gold Silver Ratio Today : 49.45
Change : -0.311 or -0.6%

Silver Gold Ratio Today : 0.02022
Change : 0.000126 or 0.6%

Platinum Price Close Today : 1661.00
Change : -5.20 or -0.3%

Palladium Price Close Today : 693.00
Change : -10.50 or -1.5%

S&P 500 : 1,197.84
Change : -1.89 or -0.2%

Dow In GOLD$ : $169.80
Change : $ (1.46) or -0.9%

Dow in GOLD oz : 8.214
Change : -0.071 or -0.9%

Dow in SILVER oz : 406.17
Change : -1.92 or -0.5%

Dow Industrial : 11,152.09
Change : -51.46 or -0.5%

US Dollar Index : 78.62
Change : 0.392 or 0.5%

In spite of Friday's equivocal closes (gold down 70 pennies and silver up 34.5c) both the SILVER PRICE and the GOLD PRICE rose today, even in the teeth of a rising dollar. Yet a touch of equivocation remained with gold.

The GOLD PRICE is also following that same pattern. Although gold rose $5.50 at Comex close, a number disappointingly near $1,355 resistance, in the aftermarket gold leapt and polished its sheen, the SILVER PRICE also added 30c after Comex closed and right now costs 2777c.

Gold's late-in-the-day rise took it above its 20 DMA (now $1,365.30). The MAC is turning up and the RSI already has, pointing also skyward.

GOLD/SILVER RATIO rose again today, to 49.45 at the close. In the last few days I had the opportunity to meditate in quiet on the ratio, and everything I came up with still points to 47.50 as the best place to swap silver for gold. Yes, it might drop further, but that sort of meandering indecision is a sure profit killer. It paralyzes you from acting on a decision, and the best investment strategy in the world is worth nothing unless you act on it. I thought about the ratio so long I even worked out the target for the next swap from gold back into silver, which should present itself within 15 weeks or less of the swap from silver into gold.

Never forget the market proverb, "Bulls get rich, bears get rich, but pigs get slaughtered." Take profits with humility and self control, and keep that greed at bay.

It appears that the silver and gold correction that began with the 9 November peak has ended and reversed. For confirmation silver must rise above 2800c and then 2900c not long thereafter, while gold needs to close over 1365, then 1380. Last high close was $1,409.

I got a right tart and tangy email from a reader in New York in answer to my remark Friday that the "dollar is sorry but we only have to bail out California and New York, and not Ireland." In his words, "Although California may need a federal bailout, so far us New Yorkers have been able to pay the price for our state's fiscal insanity without excess federal help." Well, he said a couple of other things, too.

I stand corrected, New York has pretty well held its own and the state and city shouldn't be tarred with the same brush as Wall Street and the NY Banks. And believe it or not, we in Tennessee do understand that the entire state of New York has not yet been asphalted over, and still contains many sane people and exquisite countryside -- but then, NY shares the same mountain range with Tennessee.

The US DOLLAR INDEX made a low today at 77.975, handily defending 89 support with a nice little V-bottom, then ran like a scalded dog for 78.80 resistance. Trading now at 78.622, it rose 39.2 basis points (0.55). Dollar clearly aims to beat 79.30 resistance and climb higher, ambitious, scrofulous rascal that it is.

In a classic instance of "Buy the rumor, sell the news" the Eurocrats announced a bailout for Ireland today and the Euro sold off, down 1.38c (-1%) to 1.3622. For the time being, at least, the Euro is winning the race to the bottom.

Looking at the 6 month silver chart you mark at once that above 2800c silver traded only on one day's spike, and that was a reversal day. That makes 2800c the upper resistance, although, yes, 2900c lies up there above it. Once silver crosses 2800c it will blow past 2900c like it was standing stock still. Silver reached 2789c in European trading about 2:30 a.m. EST, then dropped and dropped and dropped until 9:30 a.m. when it hit 2715c. It rallied to 2755c, fell back to double bottom at 2712c, and off that firm footing launched a leap into the sky nearly hitting 2790c again. Comex closed at 2745.7, up 28.2c.

I am inclined to see this morning's peak as finishing the move up from 2500c last Wednesday. A sideways correction lasting several days would fit well with this week's US Thanksgiving holiday. Then silver might rev its motor up on Monday. That fits a pattern often seen in a rising metals market that bottoms in August, backs off in October or November, corrects slightly, then blasts off into year end.

One more little thing: on Friday Susan's having that pacemaker implanted. Y'all have been very kind to pray for her in the past, and I deeply appreciate your intervention for her now.

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.