Tuesday, February 01, 2011

Gold Price Ceiling Formed at Roughly $1,345 it Must Break Through that to Rally

Gold Price Close Today : 1339.60
Change : 5.80 or 0.4%

Silver Price Close Today : 28.524
Change : 0.350 cents or 1.2%

Gold Silver Ratio Today : 46.96
Change : -0.378 or -0.8%

Silver Gold Ratio Today : 0.02129
Change : 0.000170 or 0.8%

Platinum Price Close Today : 1826.10
Change : 37.30 or 2.1%

Palladium Price Close Today : 822.20
Change : 8.55 or 1.1%

S&P 500 : 1,307.59
Change : 21.47 or 1.7%

Dow In GOLD$ : $185.80
Change : $ 1.51 or 0.8%

Dow in GOLD oz : 8.988
Change : 0.073 or 0.8%

Dow in SILVER oz : 422.11
Change : 5.15 or 1.2%

Dow Industrial : 12,040.16
Change : 148.23 or 1.2%

US Dollar Index : 77.02
Change : -0.716 or -0.9%

The GOLD PRICE today rose $5.80 to close at $1,339.60. Heaven help me, I am not yet persuaded that gold has turned up. I'm just not.

GOLD formed a ceiling in the last 5 days at roughly $1,345. It must break through that ceiling to continue its rally. That it failed to close above $1,340 today also leaves me queasy. Why not?

Bear in mind that $1,353 was the last low, and above that $1,363. Belief will only come when gold breaks higher than $1,363.

If I'm wrong, I won't be able to hid it, and, in a couple of days I'll belly up and admit it.

The SILVER PRICE chart looks much stronger than gold's. Unlike gold, silver today crossed ABOVE its 20 DMA (2836c) and touched the 50 DMA (2870c). Comex closed up 35c at 2852.4c.

On the five day chart SILVER has built a long, live oak tree branch, straight out for two days under 2850c. Now this looks like an uptrend, but this last two days is a consolidation. Doesn't say it will break off and fall or keep growing. If it does clear 2850c AND the 50 DMA, then 'twill jump higher. Silver is right on the line of breaking out upside.

It simply is peaking out of both sides of its mouth. RSI and MACD seem to be trying to turn up, though.

Do platinum and palladium give us any clues? Palladium is bumping up against its highest prices from earlier this month. Platinum stands below its last high ($1,843) and appears to me to be pushing up in a B wave after an A-wave drop, which implies there is a fall coming. However, it has jumped over its 20 DMA, which is positive, as are RSI and MACD.

So I am still here holding back and dragging my feet on silver and gold, although metals are certainly tugging and pulling upwards. They'll convince me when Gold clears $1,363 and silver clears 2900c. I'm just too prone to jump too quickly when silver and gold are rising, so I'm trying to hold myself back.

If you live in South Carolina, or within driving distance of Columbia, South Carolina, you ought to attend the South Carolina Economic Summit on Monday, 7 February 2011 at 5:30 p.m. EST at 300 Senate Street. Purpose is to educate legislators in preparation for the historic Joint House/Senate Hearing on Sound Money on 8 February 2011 at 4:00 p.m. Listen, I have been working for monetary reform for 44 years, and in all that time I have never seen a better bill introduced to return a state to sound money. Senator David Thomas, Chmn Banking and Insurance Committee and Rep. Mike Pitts are braving all the vitriol and ridicule the media can throw at them and still championing sound money.

At dinner on Monday you can hear Dr. Edwin Vieira, without question the world's top authority on constitutional money, as well as Dr. Larry Parks, by computer link-up.

You can make reservation and pay the $45 fee at www.SCSoundMoney.com. I am mourning because I won't be able to attend myself.

Sometimes the market runs wholly contrary to what you expect, and leaves you feeling a bit lonely. Your mind begins to ask questions, like, "Why are you completely wrong? What do others see that you don't see?" and the old favorite, "Have you lost your mind?" I reckon that just goes with the territory, and anyway I know I am always a little early and am heavily influenced by fundamentals and my metals-bullishness.

Consider stocks first: What I said about not paying attention to "safe-haven" causes came back to bite me with the Dow. The 5 day chart looks like a pot, with a handle at 1200, a drop to the pot with a bottom around 11,890, then a jump straight up to the lip and higher at 12,050. So far, I am dead wrong about stocks.

Looking more closely, yesterday stocks touched off their 20 day moving average, and instead of striking the warning bell of collapse, they used it as a trampoline (the mixed metaphors are making me seasick) to bounce higher than ever.

What meaneth this back and forth? It speaketh with forked tongue out of both sides of mouth. It could be merely a corrective break that continues higher.

On the other hand, the drop Friday might have marked merely the first leg down with today the reaction against that, preparing to drop off a cliff tomorrow or next day. RSI is overbought, MACD is trying to turn down.

But what do I know? I'm just a natural born durn fool. If I wasn't so Scotch-Irish suspicious genetically, I would believe the Nice Government Men in the white coats who know that it's best for folks like me not to think for ourselves or try to manage our own lives or chew bubble gum and walk at the same time. For some reason that syringe in their hands and that long needle just don't leave me trusting, even though they keep telling me everything is hunky-dory.

Shucks, I am so out of step that I don't even trust this rise in silver and gold and I -- the world's most rabid fiat money enemy -- am expecting the US Dollar Index to rise! The world is turned upside-down.

Dollar index today ended at 77.019, down 71.6 basis points (0.92%). Clearly I misread the chart in ignoring that slightly lower low yesterday below 77.60, and in calling the longer term chart a breakout from a falling wedge. It sank like a rock today, aborting that beginning.

Some support lies there at 77.00. If it sinks past 77, then the next stop is 76.70, then 75.60. That looks a ways from any rally.

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.