Friday, September 30, 2011

A Breach $1725 or $1540 Will Speed the Gold Price Along in the Direction of the Breakout

Gold Price Close Today : 1,620.40
Gold Price Close 23-Sep : 1,637.70
Change : -17.30 or -1.1%

Silver Price Close Today : 3004.1
Silver Price Close 23-Sep : 3006
Change : -1.90 or -0.1%

Gold Silver Ratio Today : 53.940
Gold Silver Ratio 23-Sep : 54.48
Change : -0.54 or -1.0%

Silver Gold Ratio : 0.01854
Silver Gold Ratio 23-Sep : 0.01836
Change : 0.00018 or 1.0%

Dow in Gold Dollars : $ 139.22
Dow in Gold Dollars 23-Sep : $ 135.96
Change : $ 3.26 or 2.4%

Dow in Gold Ounces : 6.735
Dow in Gold Ounces 23-Sep : 6.577
Change : 0.16 or 2.4%

Dow in Silver Ounces : 363.28
Dow in Silver Ounces 23-Sep : 358.33
Change : 4.95 or 1.4%

Dow Industrial : 10,913.38
Dow Industrial 23-Sep : 10,771.48
Change : 141.90 or 1.3%

S&P 500 : 1,131.42
S&P 500 23-Sep : 1,136.00
Change : -4.58 or -0.4%

US Dollar Index : 78.572
US Dollar Index 23-Sep : 78.356
Change : 0.216 or 0.3%

Platinum Price Close Today : 1,527.00
Platinum Price Close 23-Sep : 1,610.40
Change : -83.40 or -5.2%

Palladium Price Close Today : 611.00
Palladium Price Close 23-Sep : 641.10
Change : -30.10 or -4.7%

GOLD and SILVER are bewildered and indecisive. Yesterday gold fell 60 cents and silver rose 38.8c, today silver fell 43.1c to 3004.1c while gold rose $4.90 to $1,620.40. Gold's range was 1.75%, from 1634.15 to $1,606.93. Silver range was 5%, from 3116c to 2968.5c. Silver was jumpy and hard to trade, kept drifting below 3000c and hitting 10c air pockets.

The Gold Price did nothing today to resolve the ambiguity it left us in yesterday. Like a coil, its range is tightening and tightening, meaning selling pressure and buying pressure are about evenly matched here, but both are pushing with all their might. Like evenly match wrestlers (real wrestlers, not the TV masqueraders), one or the other will break the hold. Frankly, for the very short term, next week, it could go either way. A rally to $1,700 - $1,725 would not surprise me, but I still have to stand on my watchtower, looking for lower prices.

Here are the boundaries for gold: short term range is bounded by 1640 and 1580. Longer term, it's bounded by $1,675 (let's say $1,725 for genuine believability) and $1,540. A breach of those levels will speed it along in the direction of the breakout.

For the Silver Price, the boundaries are 3125c to 2900c short term, and 3350c and 2600c longer term.

What about other considerations? The Gold Price has already hit its 150 day moving average (now $1,580.35), a frequent limit to gold corrections, and bounced off. $1,550 offers strong lateral support, but $1,435 is stronger.

The Silver Price today hit and smashed its 300 dma (3164c)which in the past has generally contained declines, although silver might trade below that mark for a little while. If the strong support at $2600 doesn't hold, then reckon with 2500c, even 2000c.

Better get your balance. For the next 3 - 6 months a deflation scare will be all the talk of the Mighty on the TV, etc. Dollar will rally, stocks will swoon, silver and gold will slug along, maybe trend down. All the talk will be of deflation, while in fact the chance that the monetary institutional set up of the US government, central bank, and financial system will fall into real deflation is somewhat smaller than the chance of my being crowned King and Chief Chicken Catcher of Umbazziland. Once the deflation scare catches hold, the Bernancubus and his running dogs in Europe and elsewhere will puke out money like Old Faithful. So y'all keep your eyes on the horizon, not the road right in front of your car hood, and know that this precious metals bull market remains intact.

Gold/Silver ratio, by the way, rose this week and we are still targetting 57.5 for a swap from gold to silver.

Despite a very rough week for silver and gold, at week's end the scores haven't changed very much.

"Buy the rumor, sell the news," counsels the market proverb. News came this week with the German Bundestag agreeing to back the bail-out for Europe's rotten sovereign debt, demonstrating that the banks own as many German politicians as they do American. The rumor of that event drove stocks up this week. When the news came they'd done it, twas time to sell stocks. They fell again today to prove it to you.

One of my oldest friends and mentors, EH, reminded me today, in the teeth of the new Bimbo Financial Journalists and other newly discovered investing geniuses commenting on TV, to compare gold's performance against stocks. This arises because these lamebrains keep on propagandizing a non-existent bull market in stocks, and prophesying the end of gold. Let us therefore drag out the dusty and uncomfortable facts:

Gold from 12/31/10 to 9/30/11, up 14%; stocks, down 5.7%.

Gold from 9/30/10 to 9/30/11, up 23.9%; stocks, up a mighty 1.2%.

Let us hear no more bloviating from the financial parvenus and pimps.

Stocks today lost 1.38% or 153.98 points to close dead on Dow 11,000. S&P500 lost 17.98 or 1.55% to close 11,142.42.

I may be no more than a natural born durned fool from Tennessee, but leastways I have enough math to cipher percentages, even if I ain't no TV commentator with a pretty face and a low cut blouse or and ugly face and a shirt and tie.

Dow has been trending downward -- lower highs, lower lows, for the education of TV financial journalists -- since Monday. Dow in the last week and a half has traded DOWN through the short term (since August) uptrend line which experience saith portendeth lower prices.

STOCKS -- they are the wooden minnow baiting the hook for Investors.

US DOLLAR INDEX continues to rally, never mind how hard the Nice Government Men from Fed and Treasury try to slap it down. This week it successfully posted a rounding bottom, scooping down from Monday's 78.80 high and trading right now at 78.792.

The wretched Euro gapped down again today in its slide to perdition, or 1.3000, whichever comes first. Closed 1.3388, down 1.51% and a new low for the move. Somebody oughta FIRE those European NGM, cause they ain't doing their job. Nipponese Yen appears tamed today, at least closing at 129.79c/Y100 (Y77/$1) below its 20 dma (130.08) and right at the top border of an even-sided triangle.

Y'all enjoy your holiday!

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.

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 and 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 and silver on margin or with debt.

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

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