Tuesday, August 16, 2011

The Gold Price Might Finish the Year Above $2,000, the Silver Price Who Knows Where - Be Patient, be Calm, Hang On

Gold Price Close Today : 1782.00
Change : 26.90 or 1.5%

Silver Price Close Today : 39.821
Change : 0.523 or 1.3%

Gold Silver Ratio Today : 44.75
Change : 0.089 or 0.2%

Silver Gold Ratio Today : 0.02235
Change : -0.000045 or -0.2%

Platinum Price Close Today : 1821.00
Change : 8.00 or 0.4%

Palladium Price Close Today : 760.00
Change : 16.00 or 2.2%

S&P 500 : 1,192.76
Change : -11.73 or -1.0%

Dow In GOLD$ : $132.31
Change : $ (2.92) or -2.2%

Dow in GOLD oz : 6.401
Change : -0.141 or -2.2%

Dow in SILVER oz : 286.43
Change : -5.77 or -2.0%

Dow Industrial : 11,405.93
Change : -76.97 or -0.7%

US Dollar Index : 74.00
Change : 0.162 or 0.2%

Apparently suspicion, fear, and panic continue to drive SILVER and GOLD PRICES, which refuse to collapse and crawl into a cave.

After gold's fall four days ago we had a right to expect lower prices today, but forget the follow-thru. the GOLD PRICE added $26.90 for a new all-time high Comex close at $1,782. This is nice, but high was $1,786.40, not $1,815. Any close above that takes GOLD higher. Any close below that leaves gold accused with reason of intending to move lower. $1,720 remains the must-hold point.

Now delving into opinion instead of fact, it seems to me that gold proved awfully strong today. Of course, that could be nothing more than typical B-wave strength that can fool almost anybody. Reactions usually trace out in an A-down, B-up, and C-down, and B-up is notoriously strong and seductive. You can only tell the difference when the break the boundary upside or downside, but the weight of experience leaves this move suspect.

A close over $1,800 gainsays that and means the GOLD PRICE will keep on rallying.

The SILVER PRICE worked manfully all day to climb and even reached 4013c, but at Comex close fell back to close up only 52.3c (1.33%). Good progress, yes, but not a victory over 4000c resistance, and above that lies 4100c with even stronger resistance.

All this leaves me nervous because a financial panic can overwhelm all reason and experience and take markets wherever it listeth. Still, I have to follow the main chance and expected outcome.

SILVER and GOLD PRICES remain in a long term bull market. That will last another three to 10 years. The GOLD PRICE might finish the year above $2,000, the SILVER PRICE who knows where. Be patient, be calm, hang on.

Nicholas Sarcophagus of France and Angela Ferkel -- no, no, Merkel -- of Germany are top contenders for the Foolscap Crown of Dimwit of the week. In press releases from their summit they advocated a transactions tax on equities, derivatives, and currencies, which promptly tanked European equity markets.

Wait! That's not all. It gets dumber and meaner. They also want "common governance" -- read, "top-down centralized control -- in the Eurozone, forcing member nations to adopt a deficit limiting rule into their constitutions. Good-bye fiscal independence for member nations, and with it all other independence. As Patrick Henry trenchantly observed, there are only two powers worth having, the power of the purse and the power of the sword. Give up one and you won't hang on to the other.

STOCKS today backed off 76.97 points (0.67%) to 11,405.93. S&P lost 11.73 (0.97%) to 1,192.76. Nothing in nowhere-land. Stocks are trying to climb up off the floor of 10,600 and reach for their 200 day moving average at 11,994.95. Actually, they've fallen so far so fast the 20 dma (11,827) now stands below the 200 DMA, a sign confirming momentum now points downward. This won't end well for stocks.

Stocks -- the Maginot Line in the 2011 Inventory of Investment Defensive Fortifications.

US DOLLAR INDEX gained 16.2 stubborn basis points to end at 73.998, not quite 74. Weighty here is the dollar's refusal to drop below 73.80. Wants to move higher. Euro gave up some of yesterdays gains to close 1.4404, down 0.28% and destined for lesser things. Japanese nice government men have a problem on their hands, a yen that refuses to close below 130c/Y100 (Y76.92/$). Closed today 130.23, up 0.8%.

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.

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 outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.