Tuesday, January 11, 2011

Is The Gold Price Rise to $1,380.70 Something to Get Excited About?

Gold Price Close Today : 1380.70
Change : 7.00 or 0.5%

Silver Price Close Today : 29.560
Change : 0.709 cents or 2.5%

Gold Silver Ratio Today : 46.71
Change : -0.905 or -1.9%

Silver Gold Ratio Today : 0.02141
Change : 0.000407 or 1.9%

Platinum Price Close Today : 1767.20
Change : 22.20 or 1.3%

Palladium Price Close Today : 787.00
Change : 38.50 or 5.1%

S&P 500 : 1,271.50
Change : 4.73 or 0.4%

Dow In GOLD$ : $174.75
Change : $ (0.35) or -0.2%

Dow in GOLD oz : 8.454
Change : -0.017 or -0.2%

Dow in SILVER oz : 394.85
Change : 1.07 or 0.3%

Dow Industrial : 11,671.88
Change : 34.43 or 0.3%

US Dollar Index : 80.79
Change : -0.089 or -0.1%

Should we get excited about the GOLD PRICE $7.00 rise to $1,380.70 today? Well . . . Maybe, if it can clear $1,385 and climb again over $1,405. Last Friday's down spike to $1,353 has contributed a bottom, but will it last? Can it hold?

On a longer term chart the dollar has merely rallied to its 20 dma ($1,387.47) today and backed off to close below its 50 day moving average. High today was $1,386.25, low $1,364.45. Right now we still have to characterize this as merely sideways churning. Now if gold can close above that 20 dma tomorrow, that would raise better prospects.

For right now, gold has a series of lower lows and higher highs, and that spells "downtrend." Trend in force remains in force until broken.

The SILVER PRICE looks perkier than gold, with the same V-bottom on Friday. Low today came at 2904c and high at 2966c. Resistance to beat is now become 2960c.

Silver's 50 day moving average stands at 2820c and low came Friday at 2832c. Today it barely closed above its 20 DMA (2953) when it rose 70.9c to a Comex close at 2956c.

GOLD/SILVER RATIO today fell to 46.71, and below its 20 DMA (47), but that piercing of the 20 dma (from experience) is sort of like having your ears pierced: they don't grow back together too well. Generally once the ratio rises above the 20dma, the ride has ended. Of course, maybe "this time it's different."

We need to get something straight. No matter what my expectations from the market -- and I always attempt to tell y'all as truthfully as possible -- I NEVER tell anyone NOT to buy SILVER or GOLD, whether I think they're at a peak or not. Here is why:

I don't know everything.

On any given day there is a 50% chance I am right, and a 50% chance that somebody with the opposite outlook is right. Markets are simply that unpredictable. So if a customer asks me what I think, I will tell him, but my worst nightmare is that I tell someone to hold off and instead of dropping, the market rises, runs away, and they never get in. So trying to save them a few bucks, I cost them their entire investment.

I found some work papers not long ago where back in 2002 or 2003 I was trying to decide whether gold, which had reached the atmospheric height of $340, would correct to $320 or $300. Do y'all have any idea how ridiculous that $20 - $40 looks today with gold at $1,380?

I have also watched the really successful investors I have served. They take my breath away, buying big chunks whenever they get ready. What do they know most folks don't? They are buying the primary trend, and if they are right about the trend, whether they buy higher or lower, the trend will carry all purchases up skyward.

US DOLLAR INDEX today slowed its rate of descent, losing only 8.9 basis points (0.11%) to 80.792. Hanging around here at 80.80 - 80.70 works just fine for a correction, although the Dollar must not drop below 80.40 if it wants to sustain a rally. Expect higher dollar prices.

STOCKS today rose , wobbling back and forth without much enthusiasm. Dow gained 34.43 to 11,671.88, S&P rose 4.73 to 1,274.48. Stocks remain the green-tinged baloney in the investment refrigerator. Eat at your own peril.

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.