Wednesday, August 17, 2011

Silver and Gold Prices Headed Higher - Closes Below $1,720 and $39 Would Gainsay That

Gold Price Close Today : 1791.20
Change : 8.80 or 0.5%

Silver Price Close Today : 40.350
Change : 0.529 or 1.3%

Gold Silver Ratio Today : 44.39
Change : -0.369 or -0.8%

Silver Gold Ratio Today : 0.02253
Change : 0.000186 or 0.8%

Platinum Price Close Today : 1847.00
Change : 26.00 or 1.4%

Palladium Price Close Today : 776.00
Change : 16.00 or 2.1%

S&P 500 : 1,191.82
Change : -0.94 or -0.1%

Dow In GOLD$ : $131.46
Change : $ (0.81) or -0.6%

Dow in GOLD oz : 6.359
Change : -0.039 or -0.6%

Dow in SILVER oz : 282.29
Change : -4.14 or -1.4%

Dow Industrial : 11,390.57
Change : -15.36 or -0.1%

US Dollar Index : 73.75
Change : -0.257 or -0.3%

Let us delve first into PLATINUM and PALLADIUM before we come to the adult precious metals. The PLATINUM PRICE today reached its July peak ($1,823), which MIGHT be the first warning of a new rally. MIGHT because in June it peaked at $1,849.40 and at end-April $1,889.50. Contradicting higher prices is the 50 dma crossing under the 200 dma four days ago. Not hopeful, but since they are cruising along flatly together, maybe not fatal.

Palladium's chart looks a lot the NASDAQ or the Dow. Hit a new high for the move at 850.20 on 1 August, then waterfalled like Niagara with ne'er a pause to 706. Today at 776, only $11 below the 200 dma (764.63). This market has more obstacles to overcome than a one-legged pole-vaulter.

Bottom line is that as a harbinger of higher GOLD and SILVER PRICES, palladium is terrifying and platinum is ambiguous. Confused? Don't feel lonely.

The GOLD PRICE made a second close above its previous close, and a 2-day close at a new high is a fairly safe signal of a breakout. I'd like to see it close above $1,800 tomorrow to confirm that, however. The GOLD PRICE has now done everything needful to breaking out in a new rally, EXCEPT posting a new intraday high. Today's intraday high was $1,794.55 while Comex closed nearly that high, up $8.80 to $1,791.20.

Mercy! GOLD looks overextended, the MACD is high enough to give Arnold the Giant a haircut, and the RSI is way overbought. Still, as recent history has shown us, the gold price can remain overbought for a long time.

I covered some little shorts (against inventory) in SILVER today. Just couldn't stand a breakout over 4000c, and Comex closed up 52.9c to 4035c. Ratio dropped a tee-tiny bit from 44.750 to 44.391.

Really big hurdle for the SILVER PRICE is 4100c, then 4200c. SILVER now stands above its 200 dma (3428c), 50 dma (3765c), and even its 20 dma (3970c). Momentum plainly points up, and other indicators are nothing near overbought. Plenty of room for the SILVER PRICE to jump for the ceiling. Only caution is a little rising wedge building on the chart since 8 August, which might break out downside. However, in BULL markets these rising wedges sometimes break out upside, as the stock market painfully taught me in the last 1990s.

BOTTOM LINE: SILVER and GOLD PRICES headed higher. Closes below $1,720 and 3900c would gainsay that.

You wonder how people can go on believing in myths like "the efficiency of markets" when so many people stay on the wrong side of the market by clinging to their own myths and misconceptions. Still, they do. But that's no surprise. There are also lots of people who believe you can get justice in US courts.

Stock investors are being punished soundly for their faith. Dow today dropped 15.36 (0.13%) to 11,390.57 and the S&P500 dropped 0.94 (0.08%) to 1,191.82. People stay in stocks although that chart is the worst since 1987's crash. No, it's worse, topped by a huge head and shoulders or Megaphone of Death, but whichever you choose will kill both optimism and hope. Fiddling around this 11,450 - 11,400 level harkens back to resistance from November 2011. The Death Cross where the 50 dma (now 12,074.83) drops below the 200 dma (11,996.38) is fast approaching. That will point momentum down beyond all quibble.

STOCKS -- the Fokker Tri-plane of Investing Aeronautic Design.

US Dollar index dropped to the lower limit before it breaks down, 73.753, down 25.7 basis points or 0.33%. Previous low was 72.82. If so, low before that was 73.42, and that probably would stop it. With all the fear scourging the world, hard to believe the US dollar is dropping. Whoa! What's that sulfur smell in the air? Could that be the Nice Government Men at work, holding down the dollar to help their beleaguered fellow-crooks in Europe? Good bet.

The euro, beset by traitors, speculators, and the justly-distrustful, managed to gain 0.12% today and close at top of its range, 1.4427. As Queen Victoria, that noted wit, might quip, "We are not enthused." All of it reeks of sulfur. Euro needs to cross 1.4700 to get my attention, and best 1.4900 to engage my belief. This is all a show, staged by the mushroom farmers for us mushrooms.

That buoyant Yen just can't be kept down. Today closed at what looks like a new all time high, 130.61c/Y100 (Y76.56 buys one US$). Funny thing is, nobody official wants it higher, but there it floats.

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.