Saturday, July 09, 2011

SILVER and GOLD PRICES Probably Made Their Last Low Last Friday

Gold Price Close Today : 1,541.20
Gold Price Close 1-Jul : 1,482.30
Change : 58.90 or 4.0%

Silver Price Close Today : 3653.6
Silver Price Close 1-Jul : 3369.4
Change : 284.20 or 8.4%

Gold Silver Ratio Today : 42.183
Gold Silver Ratio 1-Jul : 43.993
Change : -1.81 or -4.1%

Silver Gold Ratio : 0.02371
Silver Gold Ratio 1-Jul : 0.02273
Change : 0.00098 or 4.3%

Dow in Gold Dollars : $ 169.77
Dow in Gold Dollars 1-Jul : $ 175.48
Change : $ (5.71) or -3.3%

Dow in Gold Ounces : 8.213
Dow in Gold Ounces 1-Jul : 8.489
Change : -0.28 or -3.3%

Dow in Silver Ounces : 346.43
Dow in Silver Ounces 1-Jul : 373.44
Change : -27.01 or -7.2%

Dow Industrial : 12,657.20
Dow Industrial 1-Jul : 12,582.77
Change : 74.43 or 0.6%

S&P 500 : 1,343.80
S&P 500 1-Jul : 1,339.67
Change : 4.13 or 0.3%

US Dollar Index : 75.082
US Dollar Index 1-Jul : 74.296
Change : 0.786 or 1.1%

Platinum Price Close Today : 1,730.50
Platinum Price Close 1-Jul : 1,719.20
Change : 11.30 or 0.7%

Palladium Price Close Today : 775.05
Palladium Price Close 1-Jul : 759.70
Change : 15.35 or 2.0%

SILVER and GOLD PRICES probably made their last low last Friday, but remember the difficulties of summer, so they may see more range trading, bounded by $1,560 and $1,490 and 3850c - 3370c -- through most of August. However, as it was plain last week that the gold price closing above $1,510 would turn the gold price up, and turn up it did, with a vengeance, gaining 4% in 4 days. Today it added another $11 to reach $1,541.20. Yes, I did say yesterday that a close over $1,540 would take gold at least to $1,560. Look for it next week.

The gold price chart in euros looks even more bullish than the dollar gold chart, as my friend Bob the Technical Genius pointed out to me. There it touched its 200 DMA last week, and has climbed nearly to its all-time high.

If the gold price can pierce $1,560 (closing basis) and $1,575 intraday, it will launch a new leg up. Right now euro-fears are driving it, but just be careful. A market trading in a range is just a rattlesnake weaving back and forth trying to figure out where to bite you. If you're buying for the long term, just look at the gold price and ask yourself, "Can I buy here and swallow the risk it will drop 5%?" If you can, go ahead and buy it.

The silver price gained 284.2c or 8.4% in four days. Stay out of the way.

What's odd is that today it only added 8/10 of a cent. In the aftermarket its about 20c higher.

The area 3650-3675c is old resistance now, and the 50 day moving average is kicking in its share at 3667c, too. Above the next barrier is 3850c. The silver price has turned up dramatically, but is it only for another rally-within-the-range up to 3850c? Will it re-visit 3370c?

Once again, how greedy are you? How much risk can you stand? Buying here you risk a fall of 300c or 8.2%. Want to risk that, or wait until silver either breaks out above 3850c or drops down to 3370c?

Oh, I'm not worried about silver or gold price for the next few years, or even after August, but right now we have to deal with this frustrating bottoming process, and you can never be certain you've see than bottom until an upside breakout is confirmed. If you wait until then, you'll pay a lot more. All those clowns and commentators who are pronouncing an end to silver's bull market, let alone gold's, ought to have their microphones and computers confiscated and be locked up in the stocks where people could throw rotten eggs at them. No, the long term bull market is not in any doubt or peril.

Once again, I turn to the consolations of Tennessee Philosophy. What doth it matter if a man for the sake of 8.2% risk misseth buying a bull market position? We aren't working for 8.2% or 10%, or even 20%, but the triple or quadruple the bull market will bring from here.

That's what I like about Tennessee Philosophy: it brings perspective, even to a natural born fool.

Y'all are watching a correction in a bull market. Don't get hung up on buying at the perfect price, just beware you buy all you can stand.

Stocks had their brief moment in the sun, then gave most of it back this week. Silver and gold astonished, while platinum and palladium did little. US dollar index proved its uptrend.

Whatever fuel was driving stocks was used up this week. They fell a little short of the high I expected, 12,753 versus 12,875, but they may make that point yet.

Most interesting is that stocks squandered all their strength against gold in one fell spurt, like some kid laying a toothpaste tube down on the counter and hitting it with his fist. Big spurt shoots toward the ceiling, but nothing happens after that (except your mother finds toothpaste on the wall and you have to fetch a switch off the peach tree). The Dow in Gold Dollars shot above its 200 DMA (G$172.61 or 8.35 oz) for one whole day, then fell beneath again, and today approached the 50 DMA down below (G$168.27 or 8.14 Oz). Only a matter of time until stocks begin free-falling against gold.

Stocks -- they are the empty parachute pack in Investment Sky-diving Gear.

US DOLLAR INDEX rose modestly today to 75.082, up 12.5 basis points. Not a big deal, but still a big deal because (1) dollar broke 75 this week without following thru downside, and (2) dollar index double bottomed yesterday and today at 74.85, (3) dollar remains above 75 and so in the uptrend begun off the May 1 bottom.

The euro reeled backward again with news of troubles in the Italian banking system, arrest of a friend of the finance minister, and said minister's nearness to resigning. "Is Italy next to fail?" wonder the fearful. Euro closed down 2/3 of 1% today at 1.4264. The yen jumped today back to the 20 DMA, closing at Y80.61/$ (124.06c/Y100).

Y'all enjoy your weekend.

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.