Thursday, January 13, 2011

The Gold Price Bounced off it's $1,390 Resistance to Below it's 20 DMA, Does That Calls for Lower Prices Tomorrow?

Gold Price Close Today : 1386.90
Change : 1.20 or 0.1%

Silver Price Close Today : 29.252
Change : (0.280) cents or -0.9%

Gold Silver Ratio Today : 47.41
Change : 0.490 or 1.0%

Silver Gold Ratio Today : 0.02109
Change : -0.000220 or -1.0%

Platinum Price Close Today : 1804.50
Change : 3.90 or 0.2%

Palladium Price Close Today : 806.55
Change : -3.45 or -0.4%

S&P 500 : 1,283.76
Change : -2.20 or -0.2%

Dow In GOLD$ : $174.86
Change : $ (0.48) or -0.3%

Dow in GOLD oz : 8.459
Change : -0.023 or -0.3%

Dow in SILVER oz : 401.06
Change : -0.77 or -0.2%

Dow Industrial : 11,731.90
Change : -23.54 or -0.2%

US Dollar Index : 79.22
Change : -0.809 or -1.0%

If I do what my friend Bob the Technical Genius demands and cut the top off the GOLD PRICE chart so I don't know what market I'm viewing, I see a break DOWN from the last few days' uptrend. Low today was at $1,369.25, high at $1,392. That high came as a spike shortly after the New York open, a spike that had disappeared within an hour. Gold traded sideways a while, and even closed $1.20 higher on Comex. Oh, but in the aftermarket the bottom dropped out. Right now it's trading $14 lower at $1,372.20. Sort of a "key reversal" day.

Today is not by itself fatal, but the GOLD PRICE did bounce off that $1,390 resistance area, and lodge below both its 20 dma ($1,386.64) and 50 Dma ($1,383.30). That calls for lower prices tomorrow.

GOLD/SILVER RATIO rose 1% today to close at 47.41, now 48.11 in the aftermarket. Rising ratio whispers, "Trouble" for silver and gold.

The SILVER PRICE gainsaid gold today, closing down 28c at 2925.2c on Comex although gold rose. Disharmony is never healthy.

SILVER low came at 2851c, down nearly 75c after the Comex close. 2980c resistance slapped silver to the ground. Tomorrow that 2850c becomes silver's rampart to be defended. Last intraday low came at 2832c, and the 50 DMA stands nearby at 2837c. I expect silver is in for a rough beating.

Looks like the correction that the rising Gold/Silver Ratio has been pointing at may arrive tomorrow.

Well, don't just stand there -- somebody help the dollar! Dollar index fell another 80.9 basis points today (1.4%) to 79.222, clearing the whole of the distance from 80 to 79 in a day (low came at 78.994). This brings the dollar to the 78.80 - 79 area that has supported it thrice since last December, and "fish or cut bait" time.

Mercy, yet again it is proved that I am just a natural born durn fool. Who would have thought, just looking at the facts, that finding a nest of suckers willing to be duped into buying Portuguese debt would make that much difference in the rate of the euro? A fool like me would ask, "Have the debts disappeared? Is Portugal now solvent? Greece? Ireland? Italy? Spain? Has anything really changed?"

See, those are the questions that only natural born durn fools ask, cause we are too plumb dumb to understand that facts have nothing to do with markets, only headlines, enthusiasm, and following the latest fads. So the euro gapped up today, o'erleaping its 20 DMA (1.3160) and shooting to its 50 DMA (1.3361), up 1.89% to 1.3362. Alas, natural born fools might suspect that 'tisn't euro STRENGTH that is driving it but euro SHORTS who were caught massively short the euro and had to cover by selling dollars.

The dollar has reached critical support. Let's see if it can hold on. I confess, this natural born fool has been expecting a long period (6 months or more) of dollar strength, but I'm a fool anyhow.

STOCKS today gave back most of the gains they stole yesterday. Dow dropped 23.54 to 11,731.90. S&P500 returned 2.2 to close at 1,283.76. I hear many roosters crowing about stocks, but they must be blind roosters. When I look at the Dow chart, all I can see is that massive rising BEARISH wedge which will eventually make good on its threat and break down in fears, tears, and plunges. I repent not: for me, stocks remain the day-old gizzards in the KFC of investing. (My daddy loved gizzards because he grew up eating them, but I don't have jaws strong enough to chew 'em.)

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.