Monday, October 17, 2011

The Gold Price Has Formed a Rising Flat Top Triangle, Those Usually Break Out Upside

Gold Price Close Today : 1675.50
Change : (6.30) or -0.4%

Silver Price Close Today : 3179.1
Change : 34 cents or -1.1%

Gold Silver Ratio Today : 52.70
Change : 0.362 or 0.7%

Silver Gold Ratio Today : 0.01897
Change : -0.000131 or -0.7%

Platinum Price Close Today : 1555.50
Change : 0.50 or 0.0%

Palladium Price Close Today : 617.30
Change : -8.70 or -1.4%

S&P 500 : 1,200.86
Change : -23.86 or -1.9%

Dow In GOLD$ : $140.61
Change : $ (2.50) or -1.7%

Dow in GOLD oz : 6.802
Change : -0.121 or -1.7%

Dow in SILVER oz : 358.50
Change : -3.91 or -1.1%

Dow Industrial : 11,397.00
Change : -247.49 or -2.1%

US Dollar Index : 77.22
Change : 0.604 or 0.8%

I have been awaiting for the GOLD PRICE to rally up towards $1,700 at least, but gold keeps failing to close above $1,681.70 Today it eased a little higher overnight, nearly reached 1695, but fell most of the day in US trading, with a floor at $,1665. The GOLD PRICE has coiled up into a tightening range that looks like a rising flat topped triangle. Those usually break out upside, but they can worry you to death waiting for that resolution. A breakdown here -- say, below $1,640 -- would leave gold looking very weak. An upside breakout should carry to $1,725, maybe $1,750 or even $1,800 before it fails.

I'm working on two possible outcomes here. First, that the $1,927 top was not a major one, and from here the GOLD PRICE will rally into year end. Second says that $1,927 was a major top, and gold will spend 4 - 6 months in jail doing penance before it lifts off again. A close above $1,805 sets the first outcome in motion. Comex gold closed down $6.30 at $1,675.50.

The SILVER PRICE hasn't acted nearly as enthusiastically as gold lately. Today it reached only 3265c, right near that 3250c mark that has stopped it so often. Low came at 3147. If tomorrow's trading breaks that 3150c line, silver's liable to trade back to 3000c.

Overhead SILVER needs to rise above 3350c to break out. 200 DMA stands at 3616c. Although I EXPECT the GOLD PRICE to rise and carry the SILVER PRICE with it in a corrective bounce against the recent fall, silver wouldn't surprise me much if it fell back to 3000c.

On Comex silver was settled down 34c at 3179.1c.

Today's markets:

The US dollar index rose 0.78%, 60.4 basis points, to 77.22, throwing bags of monkey wrenches into the stock, silver, and gold markets.

The Euro is probably on a tear that will run nearly to 1.4200 before it collapses, but today it was bouncing off of resistance at the bottom boundary of the 5 month trading channel. Dropped today 0.99% to 137.40. This euro-intoxication springeth from the alcoholic vapors of hope -- hope that the Europeans will actually fix their banking system. Maybe, but not until after at least Greece and maybe two or three others default on their government debt. Then all those optimists will transmogrify just as instantly into euro-pessimists. Markets have no loyalty.

Japanese yen continues to slide down the upper boundary line of a triangle, within a sidewise trading range. Rose today 0.49% to 130.18c/Y100 (Y76.82/$1). No resolution, no direction, but also no confirming weakness yet.

Stocks dashed the dreams of all those who bedded down Friday with visions of Sugar Plum profits dancing in heir heads. Bounced off 11,700 resistance like a big old June bug bouncing off your windshield at 75 mph on Interstate 40, leaving behind a gooshy yellow mess. Dow closed down 247.49 2.13%) at 11,397, hand in had with a falling S&P500 that tumbled 3.35% (23.86) to 1,200.86. Oh, I reckon stocks will still rise higher, probably even rally a while, but not much beyond the 200 day moving average (11,967). Today the Dow lost nearly every penny it had gained in five day's work last week.

Stocks -- they USED to represent a real economy, but now they're only the delusion of an economy. Reminds me of that joke laborers used to tell in the Communist countries -- "They pretend to pay us so we pretend to work." Likewise, the US pretends to have an economy, so stocks pretend to have value.

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 bubble has burst, primary trend down.

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.