Monday, December 06, 2010

Will The Gold Price Blast Through and Shoot Skyward? Silver Strongly Looks That It Intends To Move Higher

Gold Price Close Today : 1422.70
Change : 9.90 or 0.7%

Silver Price Close Today : 29.705
Change : 0.464 cents or 1.6%

Gold Silver Ratio Today : 47.89
Change : -0.421 or -0.9%

Silver Gold Ratio Today : 0.02088
Change : 0.000182 or 0.9%

Platinum Price Close Today : 1722.20
Change : -7.60 or -0.4%

Palladium Price Close Today : 755.25
Change : -9.00 or -1.2%

S&P 500 : 1,223.12
Change : -1.59 or -0.1%

Dow In GOLD$ : $165.96
Change : $ (1.43) or -0.9%

Dow in GOLD oz : 8.028
Change : -0.069 or -0.9%

Dow in SILVER oz : 382.50
Change : -0.73 or -0.2%

Dow Industrial : 11,362.19
Change : -19.90 or -0.2%

US Dollar Index : 79.57
Change : 0.242 or 0.3%

The GOLD PRICE high today was $1,426.70 a double top with the 9 November intraday top at $1,424.40. Does that constitute a double top, or will gold blast through this price and shoot skyward? The market will have to tell us. The RSI is high, but not nearly as overbought as it was in September and October. The MACD is headed up and has plenty of room to climb.

Boundaries are $1,426.70 on the upside and $1,380 on the downside.

On the Comex gold made a new high close at $1,415.30 (up $9.90) higher than November 9th's $1,406.80.

The vulnerable area is $1,410. In overnight trading and most of today that $1,410 was the unfailing backstop. Cracking that, then $1,405 would put gold on the defensive.

The SILVER PRICE ran wild today. Comex closed up 46.4c at 2970.5c, but in the aftermarket it is trading at 3011c. The floor is at 2950c, so silver must not fall past that. Upside, your guess is as good as mine: 3060c, 3450c, 3950c? Pick a number.

Yet silver share's gold's vulnerability. Although today it closed above the previous intraday high of 2933c, nothing says that cannot be a double top. True, looking at the chart from the November low at 2502c until today, silver strongly impresses upon my mind that it intends to move higher.

By the way, because the GOLD SILVER RATIO at 47.25 is relatively low now, you ought to be favouring gold in new buying. Whether the peak here, or with gold at $1,600, the reaction will come and on that reaction gold will buy many more ounces of silver than it does today, and offer us an opportunity to swap gold for silver and reap more ounces.

Numerous readers have asked me about using GOLDMONEY.COM to swap. Sure, do it, swap your gold for silver, and I would do it soon. Gold

Listening to myself I realize that I seem to be fighting an uptrend. Maybe, maybe, but this rally is flashing so many warning signs -- long life, height, speed of rise, dropping physical silver premiums, MACD and RSI (for silver) very high -- that it disturbs my tranquillity and leaves my complacency chastened and smarting.

I've been planning four years to make a swap, and today the ratio hit my target of 47.50 to swap silver for gold. I reckoned not with wholesale dealers.

Clearly they have absorbed a lot of silver in recent weeks, and refineries are backed up until February. So over the weekend they dropped the bid on US 90% silver coin. Worse, I have loads of customers who are lined up to swap silver for gold, yet I can't get anybody to buy it in the quantities I have for sale. Oh, I was able to do the IRA swaps, because they have only bullion and the spread didn't widen on bullion. I thought I had covered every base and planned for every quirk, but this one slapped me in the face like a sprung tree branch.

I think we will just have to swallow the poor price and execute the trades anyway, because what we are seeing in physical silver -- sharply lower premiums and large dealers reluctant to buy -- argues for a top, not a continuation.

The US DOLLAR INDEX today is trading at 79.571, up 24.2 basis points (0.31%), with the ratty euro and the raggedy yen down about 0.40%. The dollar bounced up after colliding with its 20 DMA (79.28), and looked right pert. Euroland, which a couple of weeks ago was synonymous with The Promised Land, now suffers rolling paranoia as the crisis monkey jumps from bankrupt country to bankrupt country. Will Portugal crash next? Or Spain? Or Italy? Or Hungary? With the dollar, at least, if California goes hooves up in bankruptcy, the dollar won't fly apart. If Ireland or Portugal turns white side up, who knows whether the Euro will survive? On the one hand, somebody must pay off all the bonds and paper the German banks hold, on the other, the German people don't like bailing out everybody else (assuming they know not that the Euro bailout actually bails out their banks, and not Ireland or Portugal).

STOCKS have stalled. Dow today closed 11,362.19, down 19.90, while the S&P scratched 1.59 to 1,223.12.. If silver and gold are dangerous right now, stocks are lethal, the puffer fish sushi ("fugu") 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.