Wednesday, July 20, 2011

If the Gold Price Does Drop Again, Buy all the Way Down to to $1560

Gold Price Close Today : 1596.70
Change : (4.20) or -0.3%

Silver Price Close Today : 39.546
Change : (0.665) or -1.7%

Gold Silver Ratio Today : 40.38
Change : 0.563 or 1.4%

Silver Gold Ratio Today : 0.02477
Change : -0.000350 or -1.4%

Platinum Price Close Today : 1774.80
Change : 7.00 or 0.4%

Palladium Price Close Today : 793.80
Change : 6.55 or 0.8%

S&P 500 : 1,325.84
Change : -0.89 or -0.1%

Dow In GOLD$ : $162.76
Change : $ 0.24 or 0.1%

Dow in GOLD oz : 7.874
Change : 0.012 or 0.1%

Dow in SILVER oz : 317.91
Change : 4.87 or 1.6%

Dow Industrial : 12,571.91
Change : -15.51 or -0.1%

US Dollar Index : 74.84
Change : -0.384 or -0.5%

The GOLD PRICE today bounced back from a firm bottom above $1,581, leaving behind a double bottom with yesterday. Gold reached 1602 but not until after Comex had closed up $4.20 a $1,596.70. Trading now around that $1,602.

If I were a big trader, I would want a flat position before that EU summit announcement, and wait to see how that played out before I went long or short. Governments are famous for surprise parties that wreck trading plans.

Nothing has changed, of course, or will change, so maybe we missed a buying opportunity yesterday. If the GOLD PRICE does drop again, buy all the way down to to $1,560. Something over $1,625 lies in the near future.

The SILVER PRICE, too, appears to have made a quick bottom yesterday, although it reached a lower low today at 3814c. I wouldn't swing over Grand Canyon using this for a rope, but my guess is that the silver price will rise tomorrow, announcement or not. Blocking silver's trajectory is 4000c, then 4075c. Underneath is support at 3800 and 3850c.

I'm going to be interested to observe how the SILVER PRICE acts at 4200c, about the only resistance between here and 4982c.

Gold/Silver ratio rose today to 40.376. The only chart I look at that gives me any expectation of lower silver and gold prices -- think one more big down leg to complete the correction from end-April highs -- is that gold/silver ratio chart. BICBW.

Y'all who did swaps from silver to gold at the lowest levels, say, below a spot ratio of 35, need to think about swapping back. To figure roughly your profit in ounces, divide today's ratio by the ratio the day you swapped. If today's ratio is 40.376 and you swapped at 32, then you could gain 40.376/32 = 1.26 or 26% in silver ounces swapping today. Better think about that, and don't get carried away by greed.

I promise to be a good boy and just grin like a natural born fool from Tennessee today and not say anything about the gawkingly incredible stupidities of central banks, the federal government, or the Twin Bees, Bernard and Ben, or other central banks and governments.

Unless, of course, I am provoked.

Whatever rocket fuel stocks were using yesterday played plumb out today. Stocks painted a raggedy, up and down chart but never managed to hold on to any gains and finished the day in the red. Dow lost 15.51 (0.12%) to close 12,571.91 and the S&P500 lost 0.86 (0.07%) to close at 1,325.84.

Stepping back from the 14 month chart a gagging impulse o'ertakes me screaming, "Broadening top!" This killer formation will drag every hopeful bull into the bear's lair and keep him their to be mauled at the bear's leisure. That doesn't mean that it will drop off right away like your car keys falling out of your shirt pocket into the lake when you lean over the side of the bass boat. Naww, it can linger on for some time, travelling up and down, then suddenly sink out of sight, leaving you staring down at the bottom of a well wondering how deep it might be.

Stocks -- they are the Arm Garter Factory in the Inventory of Modern Investment Choices.

US Dollar Index was beaten down as low as 74.755 today but that 74.80 support caught and held. Even though it dropped 38.4 basis points from yesterday (0.49%) it held on where it had to. Now if it keeps falling thru 74.80, then the dollar's frustrating uptrend will be broken. Euro rose a little today to 1.4230, up 0.52%. Yen rose about the same to Y78.76/$ (126.96c/Y100).

I reckon every market is holding its breath now, waiting for word from the EU summit over the sovereign debt crisis, and for word from Wimbledon -- no, no, make that Washington, I get confused about locations when we talk about playing games -- about raising the debt ceiling. That summit takes place tomorrow, but the fix may apply only to Greece. If that's all they accomplish, market won't move much in the aftermath and the euro will probably resume dropping, gold rising, stocks fainting. Remember, the big banks must be bailed out at all costs, if every Greek in the world has to slave for them forever. (I was provoked.)

On 20 July 1714 (New Style, 1 August old style) took effect in England the Riot Act. The act enabled local officials to order any group of more than 12 to disperse who were "unlawfully, riotously, and tumultuously assembled together" by reading a proclamation, hence our phrase that to put an end to someone's bad behaviour is to "read them the Riot Act." Those not dispersed within one hour were guilty of felony without benefit of clergy punishable by death. Benefit of clergy was a privilege whereby first time offenders could get lesser sentences for felonies. For violating the Riot Act, no such mitigation was allowed, so once you heard it read, you either ran or hanged.

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.