Tuesday, December 07, 2010

Gold Price Needs to Clear $1,430 and Reach at Least $1,458.60, 2% Above The Last High

Gold Price Close Today : 1403.10
Change : (7.00) or -0.5%

Silver Price Close Today : 29.748
Change : 0.043 cents or 0.1%

Gold Silver Ratio Today : 47.17
Change : -0.304 or -0.6%

Silver Gold Ratio Today : 0.02120
Change : 0.000136 or 0.6%

Platinum Price Close Today : 1703.70
Change : -18.50 or -1.1%

Palladium Price Close Today : 742.25
Change : -13.00 or -1.7%

S&P 500 : 1,223.75
Change : 0.63 or 0.1%

Dow In GOLD$ : $166.74
Change : $ 0.80 or 0.5%

Dow in GOLD oz : 8.066
Change : 0.039 or 0.5%

Dow in SILVER oz : 381.85
Change : -0.11 or 0.0%

Dow Industrial : 11,359.16
Change : -3.03 or 0.0%

US Dollar Index : 79.57
Change : 0.242 or 0.3%

Until about 9:00 the GOLD PRICE continued its rise from last Thursday, but at $1,430.50 the short-sellers overwhelmed the longs. They pushed gold off the cliff and it left a gap from 1421 - 1423, then continued falling. Around Comex closing time it lifted to $1,408.30 (above my second resistance level at $1,405) but then plunged again for a low at $1,397.35. Gold has since recovered to $1,403.80. Now, don't count gold out yet. Yes, it was ambushed at $1,430, but that's about where the last intraday high was, so it was logical that gold would bounce off that spot. Yes, today's fall looks like a break and peak, but I remains enshrouded in a huge "Maybe." Today gold closed at $1,408.30, down $7.00

How can we tell if it didn't peak today? It will clear $1,430 and reach at least $1,458.60, 2% above the last high. Should gold close below $1,350, then you can go ahead and catalogue today as The Peak.

The SILVER PRICE situation didn't improve today. Yes, it made a new high at 3072c early in the day, but then fought its way down a mountainside to a 2845c low, right back where it started last Thursday.

As with gold, silver's break here may or may not mark the peak. Can't tell until we watch the follow-through. A close below the 20 DMA (2744c), which since last August has served as silver's safety net, would reveal silver's intention to drop. A close below 2645c signals a large, painful drop.

I reiterate: don't count the metals out yet. Peaks have to be confirmed by markets crashing through support levels. We haven't seen that yet.

We were able to enter a few more trades today at a 47.5:1 or better GOLD/SILVER RATIO, but not nearly as many as we would have liked. If we see 47.5:1 or better, we will swap more, but the market tells us, we don't tell the market. US 90% is still trading at a large discount. That also points to a peak.

Let me clean up a mess:

1. Yesterday I meant to write "swap GoldMoney silver for GoldMoney gold", not vice versa as I did.

Most of the day today I felt like I was surrounded by anxious buzzards. It was as tough a day as I've seen in 30 years' trading. Silver's wild ride ran from 3007c to 2845c, 162c. Gold ranged from $1,430.50 to $1,397.35. Should you count them out yet -- or?

The scrofulous US dollar, warts and all, rose 38.3 basis points (0.49%) to 79.954. I seldom say, 'I told y'all so' but I told y'all so. Now the dollar has double-bottomed Friday and today at 79.10 and 79.20. It needs to clamber through 80 to prove that it is not beaten yet, but I expect that tomorrow. Euro today fell 0.52% while the yen rose 1.28%.

None of that makes any sense, nor should you expect it to, since none of these fiat currencies have any objective value. Thus they sway like wispy palms with every breeze of public emotion, first this way, then that, then clean on the ground. Anyway, dollar is leading the pack now and if it clears 80 will keep on leading for a time.

STOCKS today were mixed, some indices up, some down, signalling confusion and bewilderment. Dow lost 3.03 to 11,359.16 while the S&P500 picked up a gigantical 0.63 to close 1,223.75. Leave stocks alone: they are the Black Mamba of investments.

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.