Wednesday, December 29, 2010

Once Gold Clears $1,415.90, Who Can Stand In It's Way? Much Higher Prices Are Coming

Gold Price Close Today : 1413.10
Change : 7.90 or 0.6%

Silver Price Close Today : 30.679
Change : 0.382 cents or 1.3%

Gold Silver Ratio Today : 46.06
Change : -0.320 or -0.7%

Silver Gold Ratio Today : 0.02171
Change : 0.000150 or 0.7%

Platinum Price Close Today : 1759.20
Change : 2.00 or 0.1%

Palladium Price Close Today : 793.95
Change : 7.45 or 0.9%

S&P 500 : 1,259.78
Change : 1.27 or 0.1%

Dow In GOLD$ : $169.48
Change : $ (0.79) or -0.5%

Dow in GOLD oz : 8.199
Change : -0.038 or -0.5%

Dow in SILVER oz : 377.63
Change : 0.27 or 0.1%

Dow Industrial : 11,585.38
Change : 9.84 or 0.1%

US Dollar Index : 79.83
Change : -0.535 or -0.7%

The GOLD PRICE followed through yesterday's $22.80 leap with a $7.90 skip today, closing on Comex at $1,413.10. This falls short of the last high close (and all time high close) by about $2.80, and it did clear the $1,406 resistance.

All the earmarks of a solid rise are present. Gold has only yesterday cleared its 20 DMA (1,389.58) and is only a few points from the 50 DMA (1,372.37), not high overextended high above them. MACD has turned/ is turning up and RSI is just above 50 at 59.85. These numbers point to higher prices.

Once gold clears that last high, $1,415.90, who can stand in its way? That may come tomorrow. One little hedge on that: I might be misreading the chart and this might be the end of a little move. If so, gold might correct for a couple of days, but that's the minority opinion amongst all the many voices in my head.

The SILVER PRICE chart looks a bit more like a completed move. Regardless, today to a 106.2c gain yesterday silver added another 38.2c to close at a new high for the move, 3067.9c. Don't let my argument with myself about the next couple of days mislead you: silver has broken out above its trendline and will move higher.

Above silver lies resistance from 3060 - 3068. Once silver breaks free of that, it will shoot for 3400c.

And here's a little meditation that will place that 3400c into long term perspective: we aren't even close to a bull market top yet. Not even close. We are just entering the third leg up. Much higher prices are coming.

Best buy in silver remains the US 90% silver coin, and I would stick with that.

Today the US dollar index , well, collapsed. It traded sideways and tickled 80.15 twice. On the second tickle, somebody slapped the dollar silly. Fell straight down to 79.70 in two hours, below the 20 day moving average (1st trip wire of a direction change) and through support at 80. Now peering at the longer term chart it appears that 79.50 ought to catch the dollar. It has bounced a leetle, down now only 53.5 basis points to 79.83.

What might this be? Coming off the weekend's high above 80.60 it looks like an A-B-C correction. More, it might have sketched a double bottom (floor) with 79.60 yesterday and 79.70 today. If it that -- and not a more serious trip through 79.60 to the nether regions -- then tomorrow it will not trade lower than 79.60 and in fact should advance, say up to 80 or so. Just enough to show that it hasn't given up.

Backing off for a longer veiw, the dollar bottomed in November at 75.63 and has been climbing since then, but with a questionable character. Is that a rally, or only a correction of the long foregoing fall? So far the 20 DMA has served as the undercarriage for the rise, so yesterday's fall thru the 20 DMA might mean lower prices for the dollar.

Market will have to tell us tomorrow.

EURO peeked through its 20 DMA (1.3234) today, and may be rallying a bit.

STOCKS made new highs for the move but couldn't hold on to the gains. Dow's high came at 11,625 but it closwed at 11,585.38, up only 9.34. S&P 500 closed at 1,259.78, up 1.27.

If I owned stocks -- and I don't and won't -- that would have left me nervous, breaking into new high territory and falling back for a small gain. Tastes too much like a key reversal. Stock buyers had better enjoy the next two days.

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Thanks for your understanding.

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

- Franklin Sanders, The Moneychanger
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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.