Friday, October 07, 2011

Gold Price Reached a High of 1,663.64 Today, then Fell Back

Gold Price Close Today : 1,634.50
Gold Price Close 30-Sep : 1,620.40
Change : 14.10 or 0.9%

Silver Price Close Today : 3095.8
Silver Price Close 30-Sep : 3004.1
Change : 91.70 or 3.1%

Gold Silver Ratio Today : 52.797
Gold Silver Ratio 30-Sep : 53.940
Change : -1.14 or -2.1%

Silver Gold Ratio : 0.01894
Silver Gold Ratio 30-Sep : 0.01854
Change : 0.00040 or 2.2%

Dow in Gold Dollars : $ 140.42
Dow in Gold Dollars 30-Sep : $ 139.22
Change : $ 1.20 or 0.9%

Dow in Gold Ounces : 6.793
Dow in Gold Ounces 30-Sep : 6.735
Change : 0.06 or 0.9%

Dow in Silver Ounces : 358.65
Dow in Silver Ounces 30-Sep : 363.28
Change : -4.63 or -1.3%

Dow Industrial : 11,103.12
Dow Industrial 30-Sep : 10,913.38
Change : 189.74 or 1.7%

S&P 500 : 1,155.46
S&P 500 30-Sep : 1,131.42
Change : 24.04 or 2.1%

US Dollar Index : 78.792
US Dollar Index 30-Sep : 78.572
Change : 0.220 or 0.3%

Platinum Price Close Today : 1,496.60
Platinum Price Close 30-Sep : 1,527.00
Change : -30.40 or -2.0%

Palladium Price Close Today : 590.70
Palladium Price Close 30-Sep : 611.00
Change : -20.30 or -3.3%

Looks like SILVER, GOLD, and stocks recovered this week, but only if you don't hear those drums throbbing in the jungle. There's bad juju ahead, Bwana, as they used to say in the Tarzan movies.

The GOLD PRICE reached a high of 1,663.64 today, then fell back. I count that as another challenge of $1,675, and a third failure. Worse, the GOLD PRICE closed Comex down $17.40 at $1,634.50. that leaves $1,630 as the nearest support. If GOLD crosses that line, then sinks through $1,600, it will skid a long ways.

On the other hand, if the GOLD PRICE keeps climbing and breaks through $1,725, then gold's bottom has already been posted. However, I don't expect that. European crisis hasn't been cured yet. Crisis is like malaria. It makes you sick as a dog, then leaves. Then all unexpectedly, it returns. The cause of the crisis has not yet been treated, or perhaps the disease is so vast, no one has the resources to treat it. Either way, it will return, with teeth bared.

Wow. How could I have said yesterday that the MACD and RSI showed silver overBOUGHT when I meant overSOLD? Well, it's oversold, and when those indicators are oversold, it argues that silver ought to RALLY. (Listen to what I mean, not what I say.)

What withers my optimism? For one thing, oversold can get MORE oversold. For another, after a plunge like the one SILVER and GOLD PRICES took the week of 26 September, markets normally recover a bit, then make one more plunge down. Art lives in identifying when that has happened.

Both SILVER and GOLD are oversold, but both also show Flag or Pennant patterns on their charts, and flags always fly at half staff. That, too, implies lower prices, BICBW. However, today's performance, after yesterday's gains of 165.3c and $11.60 to the top of gold's range, felt weak, like a everybody was cashing out at week's end. Losing 101.2c today silver closed Comex at 3095.8c, once again below that critical 3100c mark. Today and yesterday SILVER did no more than rally up to its 300 day moving average (now 3186c), needful but not particularly inspiring. At its lowest

The GOLD PRICE pierced its 150 dma (now 1587.71), but has not moved far from that mark, merely bounding along it ($1,535 was roughly the 200 dma).

Now maybe that touch off the 200 dma was the bottom for gold. Could be, but even so I expect to see it go back for one final Kiss Good-bye before a bottom is complete.

Those oversold conditions might also be worked off not by a sustained rally, but a short-lived one.

I reckon my doubt is showing. I'm just not ready to throw caution overboard and dive into SILVER and GOLD after it. For one thing, I expect to see the gold/silver ratio reach at least 57.5, and it hasn't touched that yet.

So we wait, with patience, remembering that many times not doing anything also means you are not doing anything wrong, either. Not always, but sometimes.

Stocks went up, down, then up, and down again. Raggedy. Weak. Dow touched 11,232 (up 110) early in the day, then dropped as low as 11,051, climbed again and failed, and closed the day down 20.21 (0.18%) at 11,103.12. S&P500 dropped 9.51 for the day, down 0.82%, to 1,155.46.

Today has a double-toppy look, and not breaking through 11,200 next week will confirm that suspicion. Stocks must hold 10,700 support or turn down again.

It is intensely painful to watch stocks and contemplate all the folks who will ride that sinking ship down as it takes their retirement under the waves. They have a conceptual block so powerful, so strong, so unassailable, that they simply must listen to the "experts" and financial planners who keep on doing the thing that doesn't work, because they know nothing else.

STOCKS -- they're a blind date with Typhoid Mary.

US Dollar index rose a little today to close 15.8 basis points or 0.20% higher. Remember that earlier in the week it touched off 79.84, probably the top of its first leg of the rally from 73.45. Dollar may fall back to 78 or even 77.75, but its immediate future is calling it higher, lots higher, to 82.5 at least, I reckon.

Having lifted itself up off a 1.3164 bottom three days ago, the euro fell back on its bed of pain today. Fell short of its 20 day moving average (1.3551). Still destined to re-visit 1.2000. Yen basically stood still today, closing at 130.39, still moving sideways, crawling along its 20 and 50 dmas.

Y'all enjoy your weekend!

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.