Thursday, July 07, 2011

Where are We Now With the Gold Price?

Gold Price Close Today : 1530.20
Change : 1.50 or 0.1%

Silver Price Close Today : 36.528
Change : 0.617 or 1.7%

Gold Silver Ratio Today : 41.89
Change : -0.678 or -1.6%

Silver Gold Ratio Today : 0.02387
Change : 0.000380 or 1.6%

Platinum Price Close Today : 1746.10
Change : 18.90 or 1.1%

Palladium Price Close Today : 787.65
Change : 22.10 or 2.9%

S&P 500 : 1,353.22
Change : 14.00 or 1.0%

Dow In GOLD$ : $171.83
Change : $ 1.11 or 0.7%

Dow in GOLD oz : 8.312
Change : 0.054 or 0.7%

Dow in SILVER oz : 348.21
Change : -3.38 or -1.0%

Dow Industrial : 12,719.49
Change : 93.47 or 0.7%

US Dollar Index : 74.92
Change : -0.203 or -0.3%

I have a button on my keyboard that I can push to make mistakes from the minute to the spectacular. Yesterday I pushed it and it gave y'all the wrong stock index closes. Correct is the Dow at 12,626.02 (Up 56.15) and the S&P500 up 1.34 at 1,339.22. Didn't really make much difference.

As I intimated yesterday, GOLD used up all its energy climbing from $1,480 to $1,530 in two days, and leaned up against the wall to breathe today.

Today on Comex GOLD PRICE ascended a not very steep $1.50 to close at $1,530.20.

Where are we now? Possibilities abound.

1. The GOLD PRICE will hit the downtrend line from its May peak tomorrow about $1,540 and burst thru, smash minor resistance shortly at $1,555 - $1,560, and disappear into the stratosphere, leaving behind only wispy little contrails for those not on board.

2. The GOLD PRICE will trade sideways through August in a range between $1,560 and $1,575, then in September turn up in earnest, meanwhile frustrating the life out of all of us.

3. The GOLD PRICE fell down out of an even sided triangle bounded above by May 1 at $1,577.40 and June 3 @ $1,555 and below by the line drawn from May's $1,462.50 to June's $1,511.40. It broke down from that triangle 25 June, traded down to $1,478.30, and has since rallied to the APEX of that triangle, from where it will fall again to lower lows.

Of those three, No. 3 looks most likely to me, but the market tells me, I don't tell the market. Tomorrow the market will speak, but maybe out of both sides of its mouth because it will be Friday and people close out their positions before the weekend after big-gaining weeks, so gold might back off tomorrow to $1,525 or $1,518 and still come back Monday punching its muggers in the mouth and screaming through $1,540.

Whatever the outcome, that $1,540 is the mark to watch. Downside, gold must not close below $1,505 or its inertia will shift in favour of gravity.

The SILVER PRICE is not as unequivocal as gold. It remains today above its 20 DMA, reaching for the 50 Dma at 3690c. On Comex silver tweaked the croakers by stealing another 61.7c to close at 3652.8, well above 3600c resistance.

Since May the SILVER PRICE has formed a flat-topped rising triangle with the top at 3850c. These formations can break out either way, but usually break out to the upside. Silver's fault is, however that it broke DOWN out of the triangle, from 3650c (about today's level) then traded down and sideways: no resolution.

So silver tells us nothing -- not a hint -- till it closes above 3850c or below 3370c. Silver must yet plow across the wretchedly contrary seasonal ground of July and August, never kind months.

For me this sort of market is pretty much lose/lose, because it could resolve either way. Oh, I know that by August the travail will have ended, but will it hit a new low in the meantime?

No way for a natural born fool from Tennessee to tell.

By the way, the gold/silver ratio fell today to 41.891, and that is NOT bearish for silver.

Be patient, watch, box the market. If it clears 3850c buy, or if it breaks 3370c get ready to buy, but in between we don't have much guidance. I got tired of waiting and bought a goodly amount, but it may leave gravel in my mouth. So be it.

One reader asked a good question about the relation of the US dollar, Dow, and silver and gold, and questioned the Chinese economic miracle. I wrote back

Fear of the euro drives up the dollar AS WELL AS GOLD. Fear of the euro benefits both dollar and gold.

To believe that China is bulletproof economically means you must also believe 1. That developing economies building on borrowed money never experience large corrections of spongy growth (a proposition disproved by the last 150 years' history), and 2. That a planned economy can outperform a free economy. Well-founded reports of huge overbuilding and overstocking (dead inventories) have been coming out of China for more than 10 years. One day the carbuncle will burst.

Regardless what the dollar does short term, metals will rise long term because long term the US government and Federal reserve MUST inflate or die, so they WILL inflate.

TODAY stocks clambered up on the open and maintained those gains all day. Dow added 93.47 (0.74%) to 12,719.49 while the S&P 500 added 14 (1.05%) to 1,353.22.

Process of ratcheting to new levels continues. Now 12,750 is the barrier but before this rally ends the Dow will see 12,876 or higher and all the gurus and pimps -- WHOA! did I say "pimps"? Yes, I did. -- will be touting a new era and permanent high levels for stocks.

Stocks -- they're YOUR ticket to an impoverished old age. Cat food, anyone? It's reeeeally crunchy.

Somebody ambushed the US dollar index at 75.40 and hit it on the head with a ball-peen hammer. Dollar was knocked plumb out, fell to 74.85, but recovered to trade now at 74.919, down 20.3 basis points.

Appears that today marked the end of the Dollar's rise from Monday, but nothing more than that. May fall back to 74.50, but will keep on climbing, however glacially.

Euro roused today like a drunk from a gutter, close at 1.4362, then passed out again. Hit the 20 DMA. Nice Government Men in Nippon have the Yen well in hand. Closed today at Y81.26/$ (123.08c/Y100).

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.