Friday, August 26, 2011

Both Silver and Gold Prices Will Rally Further

Gold Price Close Today : 1,794.10
Gold Price Close 19-Aug : 1,848.90
Change : -54.80 or -3.0%

Silver Price Close Today : 4095.2
Silver Price Close 19-Aug : 4242.8
Change : -147.60 or -3.5%

Gold Silver Ratio Today : 43.810
Gold Silver Ratio 19-Aug : 43.577
Change : 0.23 or 0.5%

Silver Gold Ratio : 0.02283
Silver Gold Ratio 19-Aug : 0.02295
Change : -0.00012 or -0.5%

Dow in Gold Dollars : $ 130.02
Dow in Gold Dollars 19-Aug : $ 120.95
Change : $ 9.07 or 7.5%

Dow in Gold Ounces : 6.290
Dow in Gold Ounces 19-Aug : 5.851
Change : 0.44 or 7.5%

Dow in Silver Ounces : 275.56
Dow in Silver Ounces 19-Aug : 254.96
Change : 20.59 or 8.1%

Dow Industrial : 11,284.54
Dow Industrial 19-Aug : 10,817.65
Change : 466.89 or 4.3%

S&P 500 : 1,176.80
S&P 500 19-Aug : 1,123.53
Change : 53.27 or 4.7%

US Dollar Index : 73.710
US Dollar Index 19-Aug : 73.993
Change : -0.283 or -0.4%

Platinum Price Close Today : 1,832.70
Platinum Price Close 19-Aug : 1,876.00
Change : -43.30 or -2.3%

Palladium Price Close Today : 762.00
Palladium Price Close 19-Aug : 750.00
Change : 12.00 or 1.6%

I have never before seen a market make TWO (2) Key reversals in four days, but that is what the GOLD PRICE did. Now you ought to understand that normally, a key reversal will change a markets direction for a little while.

Key Reversals occur in two parts. A downward Key Reversal happens when (1) a market trades into new high territory intraday but closes lower that day than the day before, then (2) the market closes lower still next day. An upward Key Reversal happens when (1) a market trades into new LOW territory intraday but closes HIGHER that day, and then (2) closes higher still next day.

Monday and Tuesday made a downward Key Reversal. Wednesday and Thursday GOLD made an Upward Key Reversal. To ice that donut, the GOLD PRICE today rose $34.30 to close comex at $1,794.10, then rose another $30 in the aftermarket!

Looking at the way GOLD bounced off $1,712 on Thursday, then closed ABOVE $1,750 support/resistance, the only safe path is to buy gold.

Next week may prove me wrong, but this week's action shouts that gold's rally has not near-about ended.

SILVER's low for the week came at 3905c, which I count as establishing 3900c as strong resistance now. SILVER made a sort of double-bottom there on Wedensday and Thursday. Thursday it gained an astounding 158.3c.

Our confusion will be cleared up when the SILVER PRICE closes above the last high at 4428c, or drops below 3875c. Right now, you have to say that silver is trending upward in a series of higher lows and higher highs. Wednesday's plunge did NOT break the uptrend line.

The slow-burn panic continues driving investors into silver and gold. SILVER continues to gain status alongside gold. Unless SILVER and GOLD PRICES weaken off terribly on Monday (below $1,700 and 3900c), I am buying.

Both SILVER and GOLD PRICES will rally further. Big correction has not struck yet. It lieth ahead somewhere.

Remember that Our Bosses in government, central bank, and Wall Street have only two weapons in their arsenal of panic control: inflation and blarney. Inflation adds liquidity to ease the panic, blarney calms the affrighted herd. I don't care how many "tools" they claim to have, they all boil down to inflation and blarney.

As far back as 1895 or 1907, the arch-banker John Pierpont Morgan was shooting his Blarney Cannon: "The man who is a bear on the future of the United States will always go broke." Ahhh, who could doubt one of our Big Bosses?

We know from yesterday's events that Our Bosses are terrified, because they loaded the mouth of their biggest Blarney Cannon and fired it: Warren Buffett. Banks US and European are puking sick dogs, and Bank of America sickest amongst 'em. How, O, How will we gull the public into buying bank stocks? We'll get Warren Buffett to announce he's buying $5 billion of preferred stock in BoA. Now Warren ain't operating a charity, so the great humanitarian will not lose a dime on this deal. The preferred stock pays a 6% dividend and has the primary claim on BoA's assets, even before bondholders. Blarn! Blarn! Hear the Blarney Cannon!

Didn't work. Dow sank 170.81, after the early morning Buffet Blarney Barrage.

Then today Our Bosses fired another gun in their Blarney Battery: the Bernanke Blarney Blaster. Bernancubus gave a speech which everyone hoped would explain how he would save the world. Alas, the Bernanke Blarney Blaster mis-fired. Not even enough powder to blow the ball out of the tube.

Beside confirming his utterly incurable cluelessness, the Bernancubus blustered like some cheap, shabby magician that he has Tools You Know Not Of. Mmmmm, 'bout time to dig them tools out, Ben, and put 'em to work! Result of this was something only rarely seen every millennium, back to back Key Reversals in the gold market, which says to me -- and I am nothing but a natural born fool from Tennessee and have never even drawn nigh to them high-falutin' Harvards and Yales where Our Bosses are educated and made Perfect to Decide Our Pissant Destinies -- that not a single shot of the blarney cannons hit anything, and investors remain terrorized by the banks' condition. Proof? The crowds flee still gold- and silverward.

Boom! Boom! Say the Blarney Cannon. Bust! Bust! Says the people.

Uh - oh. What's that other sound I hear? Is that snickering at the back of the room?? Surely you disrespectful scoundrels are not LAUGHING at Our Bosses?

STOCKS burned up immense amounts of buying power ammunition this week for a small gain. But the Nice Government Men did pull stocks back from disappearing into the abyss. Only succeeded though in lifting the Dow to 11,300 resistance. Dow today closed up 134.72 or 1.21%, while the S&P50 close up 17.53 (1.51%) at 1,176.80. Dow finally touched it 20 DMA (11,290) but missed closing above it.

Upside the Dow must now close above 11,530 to prove an uptrend. 200 DMA, likely target of countertrend rally, stands at 11,987, as far as the sky above the earth. A close below 10,600, still to come I trow, sends the Dow spinning out of control on its next leg earthward.

Buy stocks, because it will be a vote of confidence in the ability of the Federal Reserve and US government to direct the economy. That'll show all those gold-and-silver-buying croakers AND it will earn you a bed at the I-40 Under-The-Culvert Retirement Home.

The Nice Government Men managed to keep the US DOLLAR INDEX in its 75.5 - 73.5 range again this week. Today, likely on the strength of the Bernanke Blarney Blanster's speech, the dollar index fell 56.9 basis points to 73.71. As long as the dollar index stays above 72.70, my opinon remains that the dollar is meditating a rally.

The euro on "mysterious" strength rallied today to 1.4498, up 0.82% and bumping on the top of its 1.4530 range. If it broke out above that it would signal a rally, and it would signal that the world is even more lunatic than I already surmise.

The Japanese yet closed today at 130.45c/Y100 (Y76.66/$). It remains at the top of its range, with a new all time high 5 days ago, and momentum continues upward.

WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal & I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold & silver on margin or with debt.

What DO I recommend? Physical gold and silver coins & bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.

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.