Monday, February 14, 2011

If The Gold Price Wants to Turn Up, It Needs to Close Clean Through $1,368, Then March On. Enough of This Fiddling Back and Forth

Gold Price Close Today : 1364.60
Change : 4.70 or 0.3%

Silver Price Close Today : 30.529
Change : 0.537 cents or 1.8%

Gold Silver Ratio Today : 44.70
Change : -0.644 or -1.4%

Silver Gold Ratio Today : 0.02237
Change : 0.000318 or 1.4%

Platinum Price Close Today : 1831.50
Change : 25.60 or 1.4%

Palladium Price Close Today : 823.75
Change : 12.20 or 1.5%

S&P 500 : 1,332.32
Change : 3.17 or 0.2%

Dow In GOLD$ : $185.85
Change : $ (0.70) or -0.4%

Dow in GOLD oz : 8.990
Change : -0.034 or -0.4%

Dow in SILVER oz : 401.85
Change : -0.24 or -0.1%

Dow Industrial : 12,268.19
Change : -5.07 or 0.0%

US Dollar Index : 78.60
Change : 0.091 or 0.1%

I continue to take a whipping from my friends and readers because silver and gold are making me not wildly optimistic but cautious, guarded, and suspicious. The GOLD PRICE peaked last Friday at $1,368, closed down two bucks to a cliff-hanging $1,359.90, then rose $4.70 (0.3%) to $1,364.60. High came at $1,366.65. It's hard for me to call this progress because it didn't close at a new high or even through past resistance while silver rose 1.7%. Why the disagreement? What are we not seeing?

If gold wants to turn up, it needs to close clean through $1,368, then march on. Enough of this fiddling back and forth by two-sie/three-sie dollars.

The SILVER PRICE has a flat contango, but a contango still and not a backwardation. The really far out months, in 2012 -2015, are in backwardation, but I have no data on how they behave.

Silver is pressing the issue and about to reach a resolution nobody can argue with: its 3 January old high. Today silver recovered from Friday's blowing-hot- and-cold-out-of-both-sides-of-your-mouth close and gained 53.7c to close at 3052.9c, smashing 3025 AND 3050c resistance. Momentum indicators say silver can move higher still. If it breaks through 3109c close silver will quickly race for 3500c.

This can't keep on. Either SILVER will begin agreeing with gold or gold with silver. GOLD closing above its 50 dma (now $1,372.27) will scream that both will rise.

The Dollar Index is filling out all the boxes and painting the right shoulder of an upside-down head and shoulders on its 6 month chart. Assuming the dollar does not fall below 78.50 (78.30 lowest!) it ought to rise the rest of the week.

Markets are oddly quiescent. Stocks are bobbling, but won't follow through. Silver is tugging, but gold lagging. Platinum and Palladium bounce to minimal new highs, then fall back. Euro has clearly broken, dollar definitively bottomed, it appears, but where's the confirming follow-through?

Equilibria ain't. That is, equilibria don't last. Usually they are born not of exhaustion of buyers and sellers, but of a transitory equal balancing of their ferocious force. One or the other slips and the market takes off. Therefore some day soon, triggered by who knows what, markets will see big moves up or down.

Or not.

STOCKS today showed befuzzlement, some indices up and some down, slightly. "Which way should I jump?" they seemed to say. Against gold stocks have run out of gas and can't break through G$188.00 (9.094 oz of gold equals the Dow). Dow today ended at a 5.07 loss, 12,268.19. So far Dow has proven itself incapable of breaking through 12,280. S&P500 rose today 3.17 to 1,332.32.

Stocks have painted out a fatal and deadly rising wedge, which in bear markets almost always resolves by plunging badly.

By the way, the RSI and MACD momentum indicators are so overbought on stocks that they look like a joke. Even the unpracticed eye would mark their exaggeration.

It's Valentine's Day and I can't shake out of my head the words of that great Southerner Andrew Nelson Lytle: "The opposite of love is not hate but power." Long have I turned that over in my mind, and the more I turn, the deeper Lytle's insight drives.

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

- Franklin Sanders, The Moneychanger
Phone: (888) 218-9226 or (931) 766-6066

© 2011, 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.