Tuesday, July 05, 2011

Has the Gold Price Bottom Happened?

Gold Price Close Today : 1512.30
Change : 30.00 or 2.0%

Silver Price Close Today : 35.402
Change : 2.708 or 8.3%

Gold Silver Ratio Today : 42.72
Change : -2.621 or -5.8%

Silver Gold Ratio Today : 0.02341
Change : 0.001353 or 6.1%

Platinum Price Close Today : 1741.20
Change : 17.50 or 1.0%

Palladium Price Close Today : 775.45
Change : 17.00 or 2.2%

S&P 500 : 1,337.88
Change : -1.79 or -0.1%

Dow In GOLD$ : $171.82
Change : $ (3.64) or -2.1%

Dow in GOLD oz : 8.312
Change : -0.176 or -2.1%

Dow in SILVER oz : 355.06
Change : -29.80 or -7.7%

Dow Industrial : 12,569.87
Change : -12.90 or -0.1%

US Dollar Index : 74.66
Change : 0.384 or 0.5%

Y'all are all wondering the same thing, many of you by email: HAS THE BOTTOM HAPPENED?

The worst thing happened over the weekend. I was walking through the living room carrying my crystal ball, hit a wrinkle in the rug, tripped, dropped it, and it smashed into a thousand pieces. Thus am I driven back on facts and reasoning, unable any longer to read the future.

The GOLD PRICE faked out everybody and on Comex added $30 to end at $1,512.30, quite a rise from Friday's $1,482.30. That scales $1,510 resistance and brings it to the 10 day moving average (1,512.38).

But is that the turnaround? I don't know, I'm just a natural born fool from Tennessee.

The GOLD PRICE re-bounded off lateral resistance from a May low at $1,486.50. This move started about 4 a.m. Eastern time when silver worked through $1,495. It steadily climbed after that, dropping a bit on the NY open ($1,497.59) but quickly recovering. In the aftermarket it's trading nearly as high as the $1,518 resistance. Today's high was $1,516.40, low was $1,493.

I don't know if we have seen the bottom or not, so if you're worn out with waiting, go ahead and buy. However, I tried to explain a few days ago what I am looking for. If this is it, 'twill look like this:

1. The gold price might trade a little higher, then begins to fall.

2. Falls to some price above $1,482.60 (Friday's low), then refuses to fall further.

3. The gold price begins to rise.

That's the time to buy. Of course, gold might not unfold that way. Mayhap it make a spike bottom and won't revisit those lower prices. Just have to wait and see.

If it slips lower than $1,482.60, then hold off because lower prices will come, maybe the 200 DMA ($1,417)

A gold price close above $1,530 soon would confirm that we will not see lower prices. One way or the other, we ought to see a bottom soon, perhaps this week but surely by end-July.

The SILVER PRICE behaved much like the gold price, beginning its climb from 3420c and reaching a high of 3566c. I understand that rising 170.8c in one day to close at 3540.2c deserves respect, but that only brought the silver price back up to its 20 DMA (3547c).

If the silver price can close above its last high, 3675c, it will probably be telling us it has bottomed. Last week's 3359c low touched the lateral support. Maybe that was all the penance silver needed to do. But I prefer to apply the same tactics to silver:

1. Wait for it to fall,

2. If it falls to some price above 3360c and then refuses to fall further, then

3. Silver begins to rise,

Buy it. If it closes below 3360c, it will drop to the 200 dma (3178c). All of this ASSUMES silver does not close above 3675c, which would gainsay this tactic and command us to buy at whatever price the market is trading at.

Bottom's getting close. I may be a pure fool for waiting, but I am trying to learn patience.

STOCKS today have that raggedy look they get when they've run out of steam. Up, down, up down, no progress. Surprise, surprise, last week's rally occurred on light volume, so most of it can probably be laid at the feet of the Nice Government Men and their Plunge Protection Team.

Stocks had risen 5 days running, so a one day fall doesn't say much really. 12,600 has become the blocking resistance. If the Dow can clear that, it will hit 12,875.

Today the Dow closed down 12.9 points at 12,569.87. S&P500 followed right along, down 1.79 points to 1,337.88.

When I was a kid my mother always told me to stay away from mouse traps. You can imagine how much good it did to tell a little boy to stay away from something with springs, wire, and a sudden explosion of noise and movement. But I learned through my pigheadedness that playing with a mousetrap inevitably results in the bail snapping down sharply on the player's finger. Always.

STOCKS -- the mousetrap in the Investment Toy Box.

The US DOLLAR INDEX today rose 38.4 basis points (+0.49%) to 74.659. In other words, it trampolined off the uptrend line rising from the 72.93 May low, confirming that uptrend. In the process it also rose above its 50 and 20 day moving averages. Dollar will move higher immediately.

Euro lost 0.70% today to close 1.4422. Yen also gave up and fell to Y80.74/$ (123.85c/Y100). Dollar will move higher.

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.