Friday, July 22, 2011

The Gold Price has Traced Out a Giant W on its Chart, With a Double Bottom at Roughly $1,580 - $1,585

Gold Price Close Today : 1,601.30
Gold Price Close 15-Jul : 1,589.80
Change : 11.50 or 0.7%

Silver Price Close Today : 4011.3
Silver Price Close 15-Jul : 3906.3
Change : 105.00 or 2.7%

Gold Silver Ratio Today : 39.920
Gold Silver Ratio 15-Jul : 40.698
Change : -0.78 or -1.9%

Silver Gold Ratio : 0.02505
Silver Gold Ratio 15-Jul : 0.02457
Change : 0.00048 or 2.0%

Dow in Gold Dollars : $ 163.71
Dow in Gold Dollars 15-Jul : $ 162.25
Change : $ 1.45 or 0.9%

Dow in Gold Ounces : 7.919
Dow in Gold Ounces 15-Jul : 7.849
Change : 0.07 or 0.9%

Dow in Silver Ounces : 316.14
Dow in Silver Ounces 15-Jul : 319.44
Change : -3.30 or -1.0%

Dow Industrial : 12,681.16
Dow Industrial 15-Jul : 12,478.21
Change : 202.95 or 1.6%

S&P 500 : 1,345.02
S&P 500 15-Jul : 1,315.79
Change : 29.23 or 2.2%

US Dollar Index : 74.224
US Dollar Index 15-Jul : 75.140
Change : -0.916 or -1.2%

Platinum Price Close Today : 1,795.40
Platinum Price Close 15-Jul : 1,760.30
Change : 35.10 or 2.0%

Palladium Price Close Today : 806.95
Palladium Price Close 15-Jul : 782.35
Change : 24.60 or 3.1%

Let numbers speak, not opinions, ratiocinations, and interpretations. Through all the up and down, silver and gold held their ground gained this week. Stocks added a little, while the dollar fell. Platinum gained 2% and palladium with +3.1% was the big gainer for the week.

Now come the opinions, ratiocination, interpretations, and wild guesses.

Tuesday, Wednesday, Thursday, and today the GOLD PRICE has traced out a giant W on its chart, with a double bottom at roughly $1,580 - $1,585. If anybody still thought he could parse this market, he was handed his head again today. After the European bail out was announced, the GOLD PRICE fell to $1,585. Pressure of Greek default removed, bailout arranged ought to have eased demand for gold, right? Wrong. Came roaring back today, up $14.50 to $1,601.30 on Comex and an intraday high at $1,607.

What else can you say but, "The GOLD PRICE will move higher next week." It will break through $1,607 and keep on going, since it refused to break down when the euro deal was announced.

Here's an intriguing tidbit. Soon there will be no gold coins that sell for less than $100. There's the Mexican two pesos (0.0482 oz) for about $78 and the Mex 2-1/2 pesos (0.0603) for $97. If they were available, the old US $1 gold pieces (0.048375) would cost about $78. When that $1.00 gold piece reaches $100, that is, 1/100th of the paper dollar's 1913 value, gold will stand at $2,067.18, a mere 29% above its present value.

Silver's spike bottom on Wednesday marked the beginning of another uptrend, or at least yesterday's and today's lows were higher than Wednesday. The SILVER PRICE was stymied by 4025c today, but refused to sink lower than 3889c. Comex gained a staggering 117.6c to close Comex at 4011.3c, over 4000c again.

Standing in the way is resistance just under 4100c. Once the SILVER PRICE crosses that, y'all must bear in mind, virtually no resistance appears before the last high at 4982c. Meanwhile the 20 DMA (3682c) crossed above the 50 DMA (3633c) and other momentum indicators have turned up. I have to conclude the SILVER PRICE will move higher next week.

Yes, I know it's all out of season and unexpected, but even against the tide of "good" news out of Europe, silver and gold are determined to rise. Don't stand in their way, they'll bruise you.

The intraday Dow high at 12,754 was matched almost exactly by yesterday's 12,751. Either that marked a double top whence the Dow will fall, or it is merely pausing in a new rally.

Favoring a rally is the Dow's position above its 50 and 20 DMAs (12,343 and 12,465). Also the 20 DMA crossed above the 20 a week ago, turning the momentum up. So it can rise further still.

Stocks were confused today. Dow fell 43.25 to 12,681.16 while the S&P500 rose 1.22. Last two days action on the daily chart is rolling over floorward.

I've been over and over stocks in my mind, and I just can't get around the gigantic facts. In inflation adjusted terms, stocks have lost since 2000. In silver and gold terms, they've lost more than 80%, with another 80% to go. I know there must be some reason that people want to own stocks, I simply cannot imagine what it might be.

Stocks remain the Vanishing Creame in the Investment Make-up Cabinet. Rub it in, your capital vanishes.

Sobriety bit today after yesterday's drunken enthusiasm over the Greek bail-out deal -- maybe I ought to call that a "deal-ette", since it ain't much of a deal -- and the US dollar index rose 20.9 basis points to 74.224, up 0.27%. Doesn't help the technical damage dollar did yesterday by falling through the uptrend line from May. Only question now is which previous bottom will catch the dollar, 74.11, 73.50, or 72.70? Yesterday's goose carried the euro only to the downtrend line, not thru, and today it gave a chunk of that back. Closed 1.4372, down 0.37%. Remains barely above 50 and 20 DMAs, which are paralleling each other (1.4301 and 1.4273). Euro remains locked in a downtrend, in spite of all the help the Nice Government Men and Benevolent Central Bankers have given it.

Japanese yen broke out upwards two weeks ago and at yesterday's high of Y78.22/$ (127.85c/Y100) threatens the earthquake high at 128.79. BoJ NGM must be having three hissy fits.

O, black day! On 22 July 1944 the Bretton Woods (New Hampshire) Conference created the International Monetary Fund and the post war monetary arrangements with the dollar only fixed to gold and every other currency fixed to the dollar. For the US economy it was a one way ticket to hell, because it guaranteed that US manufacturers were subjected to rising costs and lower prices thru domestic inflation, while their international competitors exporting to America had falling costs and rising prices by receiving gold-convertible dollars. Great idea, Nice Government Geniuses. Any wonder American industry dwindled over the next 30 years?

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.