Thursday, December 16, 2010

If Today Marked the Bottom of the Gold Price Decline, Then Tomorrow it Ought Not Drop Through $1,365

Gold Price Close Today : 1370.40
Change : (15.10) or -1.1%

Silver Price Close Today : 28.757
Change : (0.468) cents or -1.6%

Gold Silver Ratio Today : 47.65
Change : 0.246 or 0.5%

Silver Gold Ratio Today : 0.02098
Change : -0.000109 or -0.5%

Platinum Price Close Today : 1698.70
Change : 1.60 or 0.1%

Palladium Price Close Today : 739.75
Change : -7.45 or -1.0%

S&P 500 : 1,242.87
Change : 7.64 or 0.6%

Dow In GOLD$ : $173.46
Change : $ 2.53 or 1.5%

Dow in GOLD oz : 8.391
Change : 0.122 or 1.5%

Dow in SILVER oz : 399.88
Change : 1.52 or 0.4%

Dow Industrial : 11,499.25
Change : 41.78 or 0.4%

US Dollar Index : 80.04
Change : -0.218 or -0.3%

The SILVER PRICE nearly fulfilled my expectations today, falling as low as 2829c but not quite touching the 20 DMA (2816c) and not even approaching the 2800c I thought we might see.

Midday silver made a V-bottom, then climbed off that bottom to 2880 -2890 now. Comex closed down 46.8c at 2875.7.

The trading from Tuesday thru today appears on a five day chart to have finished an orderly correction. This will be confirmed if silver remains above 2870c tomorrow, and climbs. Resistance above lurks at 2920c, 2940c, and of course 3000c. Close below 2870c gainsays optimism.

Ut argentum, ut aurum. As silver, so gold today. Five day GOLD PRICE chart looks about the same, but the bounce off the V-bottom at 1361.30 wasn't quite as vigorous. On Comex gold lost $15.10 to end at $1,370.40. Yesterday I was expecting gold to hit the 50 DMA ($1,368.50) and it pierced that and rebounded.

If today really marked the bottom of gold's decline, then tomorrow it ought not drop through $1,365, and must not close down there. Much better would be a close above $1,380 resistance.

I saw that gold today at $1,368 and I bought both silver and gold. Whether they rocket up out of this decline or travel sideways a few days makes no difference, I believe both are building for another rise which will carry silver to 3400c and gold to $1,475 or even $1600. This will unfold fast and furious, and blow out by mid-January most likely. Remember that next week falls Christmas, so not too much should happen then. Week after Christmas sometimes is light, but often turns crazy.

I don't want y'all to let this US DOLLAR INDEX out of your mind. Its performance will largely determine other markets' performances in the next 6 - 12 months. It has pretty well exhausted itself to the floor while other markets are near exhaustion at the ceiling. Get ready for them to swap directions for a while.

Correcting dollar index today was yet strong enough on the re-bound wave to make a high slightly above the Wednesday high. Only a garlicky market does that.

Ceiling over the Dollar Index is 80.40. It really must not drop much below 80, a few basis points only, or it would negate my outlook. Today it lost 21.8 basis points to end at 80.04.

Time out for a definitional footnote. Some nervous readers keep misconstruing what I mean by "final," "peak," and suchlike words. "Final" means "final" except when it means "final for the nonce." When I believe that we are reaching the final final peak, I will not keep it a secret, I promise. I'll scream like a hog with a hangnail. However, that final peak lies years in the future, three at least and probably more. So relax, open another bag of chips, and keep sitting on you silver and gold.

STOCKS today rose, proving that the world has not yet run out of easy marks. Dow added 41.78 points to 11,499.25 and the S&P500 rose 7.64 to 1,242.87. I still await a large and grisly break in stocks, but really don't have a dog in that fight because I wouldn't buy stocks if they were giving away toasters with them. As the aposematic poison dart frog is to herptiles, so are stocks to investments. Not cuddly.

Speaking of earthquakes, one occurred in my life on 16 December 1967: I married my wife Susan. Trees were knocked down, riverbanks collapsed, church bells rang, my life has never been the same, and gets better all the time. In case you are mathematically inclined, we got married when I was 7 and she was 10.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
Phone: (888) 218-9226 or (931) 766-6066

© 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.