Wednesday, September 21, 2011

Watch that $1,770 Gold Price Support - If that Breaks, Look for $1,705 Next

Gold Price Close Today : 1,805.50
Change : -1.10 or -0.1%

Silver Price Close Today : 40.42
Change : .34 or 0.8%

Platinum Price Close Today : 1,788.20
Change : 6.30 or 0.4%

Palladium Price Close Today : 711.10
Change : -4.90 or -0.7%

Gold Silver Ratio Today : 44.67
Change : -0.41 or 0.99%

Dow Industrial : 11,408.66
Change : 7.65 or 0.1%

US Dollar Index : 77.03
Change : -0.06 or -0.1%

On Thursday and Friday, 22 and 23 September, I will be travelling and so will not be sending out commentaries. God willing, I will return on Monday, 26 September.

TODAY something odd happened to the US dollar. It reached support at 76.80, then Comrade Chairman Ben Bernancubus announced that the Fed will shift its US treasury debt holdings to longer term bonds. The Nice Government Men will buy $400 billion of 6 to 30 year bonds over the next 9 months, while selling an equal amount of 3-year or less debt. Object of this manipulation is to push down long term interest rates, flooding the market with artificially cheap money which under their Keynesian thinking means that business will flourish. It won't, as even this natural born fool from Tennessee could tell them, it will only prolong the waste and pain and waste more precious resources. These people ain't got the brains God gave a screwdriver.

The Fed's announcement -- or alien messages from outer space -- sent the dollar index gapping up and it is now trading at 77.304, up 27.4 basis points but most important of all, tapping on that 77.40 resistance that has stymied it this week. Dollar is going higher, count on it, hard as the NGM try to keep it down.

Naturally the Euro dropped 0.42% to 1.3659, on its way to 1.3000. Yen gained 0.36% to 130.58c/Y100 (Y76.58/$1). Fed's move hasn't helped the program of raising the euro very much. What a bunch of goofs. It's like watching the movie, "Three Stooges Run the Central Bank."

And the Three Stooges helped the stock market today, too. Dow lost a modest 283.82 (2.49%), holding on most of the day but then sinking like a rock in a churn after the Fed announcement. Dow closed 11,124.84, while the S&P fell even further, 2.94% (35.33) to 1,166.76. If every doctor was as skilful as Dr. Ben, we'd have a building boom in this country -- building cemeteries.

I don't know why the GOLD PRICE fell today -- dollar up, gold down? Technically it's already in a decline, so most likely it's merely following through to the downside. Gold closed down $1.10 at $1,805.80 on Come, but in the aftermarket has lost nearly $20 to trade at $1,786.90.

Gold's five day chart has strong support at $1,780 and stronger still at $1,770. Picture's not as clear as you might think, as yesterday's action looks like an impulsive move up, and today's might be merely a correction to yesterday.

Awww, stop over-complicating things! Watch that $1,770 support. If that breaks, look for $1,705 next. Overhead GOLD would have to earnestly challenge $1,920 to reverse course. No point in talking about upside, though, until and unless gold first clears its 20 day moving average at $1,822.

SILVER backtalked gold today, rising 33.6c on Comex to 4042.3c while gold fell. Never quite know what to make out of those bi-metallic closes, because sometimes they foretell a strong up day. Yet that usually comes after they've been attacked for a few days and dropped.

Just staring at the chart, today struck silver a deep wound. Since Monday's 3900c low the SILVER PRICE has climbed all the way to 4068c, but after that Fed announcement silver just fainted dead away, dropping to 3957c. Keep you eye on silver's behavior at 3900c. If it falls through that, we have to reckon with 3700, even 3675c.

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.