Thursday, July 21, 2011

More Technical Evidence the Gold Price Will Move Lower

Gold Price Close Today : 1586.80
Change : (9.90) or -0.6%

Silver Price Close Today : 38.937
Change : (0.609) or -1.5%

Gold Silver Ratio Today : 40.75
Change : 0.377 or 0.9%

Silver Gold Ratio Today : 0.02454
Change : -0.000229 or -0.9%

Platinum Price Close Today : 1784.10
Change : 9.30 or 0.5%

Palladium Price Close Today : 806.50
Change : 12.70 or 1.6%

S&P 500 : 1,343.80
Change : 17.96 or 1.4%

Dow In GOLD$ : $165.77
Change : $ 3.02 or 1.9%

Dow in GOLD oz : 8.019
Change : 0.146 or 1.9%

Dow in SILVER oz : 326.79
Change : 8.89 or 2.8%

Dow Industrial : 12,724.41
Change : 152.50 or 1.2%

US Dollar Index : 74.04
Change : -0.750 or -1.0%

The GOLD PRICE took a jawbuster today and fell $9.90 to $1,586 at Comex close. We're right back where we were on Tuesday, only with more technical evidence the GOLD PRICE will move lower. Could stop at $1,560 support, or reach 50 DMA at $1,532 (or $1,540 support). Any close above $1,605 gainsays that and turns gold up like an express train.

Not sure yet what we are seeing, but one of two transmogrifications. First may be a small correction to the latest breakout that returns to somewhere near 50 DMA, then shoots again skyward. Second might be the last leg down of the correction that began end April. That makes the high Tuesday the top of a B-wave in an A-down, B-up, C-down correction, and we might see lower prices than we have yet, i.e., lower than $1,462.

Either way, I expect gold by 31 December to be trading higher than it is today.

Ahh, this catches the eye! The SILVER PRICE today did not fall nearly to its Tuesday or Wednesday lows (3850c and 3814c). On Comex it lost 60.9c to close at 3893.7c, but it plainly has rolled over and should move lower. Will 3800c stop it? I don't know. The SILVER PRICE stands in the same case as gold. If it dips below 3780, you have to reckon with 3350c again. A close above 4088c contradicts that.

Be patient. All this Greek-rescue and debt-ceiling theater will be over soon, and more ugly monetary realities will emerge, pushing both metals higher. The July rally in silver and gold vividly illustrate how nervous the world is. None of that will change or depart.

The EU is pulling an old trick for bailing out banks. setting up a special fund or agency to dumped all the bad paper into, then working it out over time. US government pulled the same trick with the early 1990s savings and loan crisis. They set up the Resolution Trust Corp. to manage the insolvent SandLs and sell off their pile of bad mortgages and property and ease the loss off onto the taxpayer a little at a time. Europeans call it the European Financial Stability Fund (EFSF), but it is the same "dump the slop into one bucket" strategy. ECB agreed to "maybe" accept Greek collateral if Greece defaults. In other words, they will.

So for the nonce, the crisis is papered over. Stock markets took that as good news -- they would have taken the atomic bombing of Paris as good news today. Dow rose 152.50 to 12,724.41 (+1.21%) and the S&P500 added 17.96 (1.35%) to 1,343.80.

Dow broke thru 12,600 on the open, in fact, to 12,750 and stalled there. Now the Dow has reached the point where it stalled before, so two roads are possible: it fails, and begins a long plunge. Or, it will clear the 12,750 level, move higher, complete a double top with the last high of 12,876, and THEN plunge.

Either way, stocks remain the eau de polecat in the Investment Parfumerie. Stay away, because once you get that stuff on you, you can't wash it off with lye soap.

Zut alors! The word about the EU fix must have leaked out early, because the dollar began falling from the NY open and never stopped till it neared 74. Traded sideways the rest of the day, then broke down to 73.80. Meanwhile the euro jumped to 1.4436, up 1.53%. Doesn't matter. Choosing between the dollar and the euro is like choosing off the salad bar in a hog sty, but I'd choose the dollar every time. Euro remains in its down trend, dollar broke down and will revisit 73.50 or 72.70. NGM will see to that.

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.