Friday, July 01, 2011

Gold Price has now Dropped Below its Uptrend Line, Below its 20 DMA, 50 DMA and Made a New Low for the Move

Gold Price Close Today : 1,482.30
Gold Price Close 24-Jun : 1,500.50
Change : -18.20 or -1.2%

Silver Price Close Today : 3369.4
Silver Price Close 24-Jun : 3463.8
Change : -94.40 or -2.7%

Gold Silver Ratio Today : 43.993
Gold Silver Ratio 24-Jun : 43.319
Change : 0.67 or 1.6%

Silver Gold Ratio : 0.02273
Silver Gold Ratio 24-Jun : 0.02308
Change : -0.00035 or -1.5%

Dow in Gold Dollars : $ 175.48
Dow in Gold Dollars 24-Jun : $ 164.42
Change : $ 11.06 or 6.7%

Dow in Gold Ounces : 8.489
Dow in Gold Ounces 24-Jun : 7.954
Change : 0.53 or 6.7%

Dow in Silver Ounces : 373.44
Dow in Silver Ounces 24-Jun : 344.55
Change : 28.89 or 8.4%

Dow Industrial : 12,582.77
Dow Industrial 24-Jun : 11,934.58
Change : 648.19 or 5.4%

S&P 500 : 1,339.67
S&P 500 24-Jun : 1,268.45
Change : 71.22 or 5.6%

US Dollar Index : 74.296
US Dollar Index 24-Jun : 75.587
Change : -1.291 or -1.7%

Platinum Price Close Today : 1,719.20
Platinum Price Close 24-Jun : 1,686.00
Change : 33.20 or 2.0%

Palladium Price Close Today : 759.70
Palladium Price Close 24-Jun : 734.00
Change : 25.70 or 3.5%

What a difference a week makes -- to stocks, if not to anything else. And to the dollar. Silver and gold continue moving down, as expected. Let's look closer.

Remember that last Friday the GOLD PRICE closed at $1,496, below $1,500 first time this move. It rallied slowly but assiduously to a high of $1,512 overnight over Wednesday-Thursday, then wilted. Yesterday clung to $1,500, and today dropped $20.

Comex GOLD today closed down $20 at $1,482.30, below the last ($1,486.50) low. Tote it up: the gold price has now dropped below its uptrend line, below its 20 DMA and 50 DMA, made a new low for the move, and so I have to expect 'twill move lower still. First support lingers at $1,450 - $1,460, which at 7-league boot moves like $20 a day gold will reach next week. Below that awaits the 200 DMA, frequent target of bull market corrections, at $1,416.

A close above $1,510 gainsays all that and turns gold up, but that's a very remote chance.
The SILVER PRICE followed the same pattern as gold, only much weaker. From a high this week about 3510c the silver price lost a fat 141c to close Comex today at 3369.4c (down 111.8c today alone).

Ahh, now we have to watch very closely. Should the SILVER PRICE refuse to break last Monday's low at 3320c, we'll have to ask whether it has finished correcting. Still, I don't think that's the case. The 200 day moving average lies not far distant at 3171c, scarcely 200c below today's close. With the silver price dropping today 111.8c, it seems reasonable to reason that it will hit that 200 DMA. Momentum indicators for silver and gold prices both show no signs of upward life.

Gold/Silver Ratio at 43.993 is bumping on the top of the range, begging to break out and move to the 200 DMA at 46.01 or higher.

Next week may bring the lows in silver and gold, but they could well take longer. In 2004 the ratio made three peaks at nearly the same level before the reaction was completed

Behold, the value of patience! Just wait and watch and let the price come to you. Silver and gold prices remain in a furious bull market and once this correction ends will vent that fury on anyone standing in their way. Market is handing y'all a bargain, you'd better be ready to grab it. With both hands and your teeth.

Plain that stocks turned around this week, and have now climbed with garlicky vehemence for five days. Today's close at 12,582.77 (up 168.43 or 1.36%) brought the Dow to its June 1 high of 15,574. IF stocks can pass this point they will no doubt reach 12,875.

S&P500 today at 1,339.67, up 19.03 or 1.44%. Similar numbers to those for the Dow is a high at 1,370.

Stocks now are offering y'all an example of how limited seasonal charts are. Seasonal charts are averages, and show stocks retreating this time of year ON AVERAGE. This year ain't average.

Wow. Stocks rising. Does that mean I've been wrong all this time and misled y'all? Well, I don't claim to be anything but a natural born fool from Tennessee. Never even owned a pair of them shiny, pointy shoes them Wall Street smart boys wear, and ain't ever gonna buy any. Sharkskin suit neither. Nor silk.

Ain't gonna buy any stocks, either, because in spite of this passing rally, stocks are in a PRIMARY DOWNTREND (Bear Market) and so are doomed -- doomed, d'ya hear? -- to move lower in true value terms. All this rallying is a sucker trap the bear plays to fill up his lair with victims.

Stocks -- they are the rabid wolverines in the Investment Pet Store.

US DOLLAR INDEX dropped all last week after jumping up to 76 last Monday, and finally settled above 74.20 (trading now at 74.296). It appears to have ended its down move, which was generated in part by the delirious (I use the term advisedly) optimism born of the "settlement" of the Greek government's liquidity crisis.

All this has merely brought the dollar to kiss its uptrend line. Rally has not ended, but dollar turns around slowly. Likewise, the Euro's great rally this week, with today's close at 1.4524, has only brought it back up to the downtrend line.

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

- Franklin Sanders, The Moneychanger

© 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.