Monday, October 10, 2011

If The Gold Price Passes Above $1,675 It Might Rally To $1,725

Gold Price Close Today : 1669.60
Change : 35.10 or 2.1%

Silver Price Close Today : 3194.4
Change : 98.6 or 3.2%

Gold Silver Ratio Today : 52.27
Change : -0.531 or -1.0%

Silver Gold Ratio Today : 0.01913
Change : 0.000192 or 1.0%

Platinum Price Close Today : 1520.70
Change : 24.10 or 1.6%

Palladium Price Close Today : 613.75
Change : 23.05 or 3.9%

S&P 500 : 1,194.89
Change : 39.43 or 3.4%

Dow In GOLD$ : $141.56
Change : $ 1.15 or 0.8%

Dow in GOLD oz : 6.848
Change : 0.056 or 0.8%

Dow in SILVER oz : 357.91
Change : -0.74 or -0.2%

Dow Industrial : 11,433.18
Change : 330.06 or 3.0%

US Dollar Index : 77.53
Change : -1.210 or -1.5%

In perfect hindsight I erred Friday by concluding that the GOLD PRICE had made its third -- and fatal final failing -- attack on $1,675. Probably did that today, but then again if gold passes above that it might rally to $1,700 - $1,725 and make you think it was eating chili peppers and chewing garlic and on its way to the moon -- just before it fails again. Listen, if the GOLD PRICE gets through $1,750, y'all can point in my direction and laugh about how wrong I was, because that would prove it had begun rallying again. Till then, don't laugh too loud.

Bottom of the GOLD PRICE range lies at about $1,595. Break below there brings a re-visitation to $1,535 or lower.

Comex gold closed 1,669.6, up $35.10.

Today the SILVER PRICE successfully broke through 3100c and closed Comex at 3194.4c, up 98.6c. Still, this leaves silver below still more formidable resistance at 3250c. Looking at the flag on silver's chart, today made no progress at all toward gainsaying that harbinger of lower prices.

Both SILVER and GOLD could rally for a week or more to work off the present oversold condition and prepare for another leg down. Exercise caution.

In the time after Germany invaded Poland in 1939 with its "Blitzkrieg" (Lightning war) and the beginning of the German offensive into the the Low Countries in spring 1940 the inactive lull war called "Sitzkrieg" (Sitting war). Folks began to wonder, before the lightning struck again, whether there would even be a war. Y'all know what they found out.

Likewise today Greece has for all intents and purposes defaulted, with all that implies for the financial system and the euro flying apart. Yet nothing has happened, no follow-through. Don't be fooled by Sitzkrieg. The lightning will yet strike, dollar will rally, stocks, gold, and silver will fall, and central banks (like England's last week) will begin even more tsunamis of quantitative easing and whatever ever other monetary emetic they can imagine to pump up money supplies around the world. And it will have as much effect as throwing a feather into a jet engine.

Today's trading was probably dominated as much by traders' holiday absence from the market as it was by anything else.

US DOLLAR INDEX took a big fall today, but you need not search the headlines for the cause. Might find the catalyst there, but not the cause, for the cause is "the fullness of time." That is, dollar is correcting its long climb from 73.45 to 79.84, and this fall merely belongs to that correction. Dollar might yet fall to 77.25, about where the top trading channel lies, and give it one final Kiss Good-Bye. Do not, however, fall into the error of concluding that the dollar's rally has ended. You will pay dearly for that error.

Yen went nowhere today, closed 130.37/Y100 (Y76.70/$1) or down a microscopic 0.02%. Flat. Euro was the big gainer, adding 2.01% to 1.3647. This left a gap up o'erleaping the 20 day moving average (1.3550), which points to higher prices. Still, till it crosses 138.25, bottom line of the trading channel, nothing meaningful has occurred.

STOCKS rose a frenzied 330.60 or 2.97% today for a Dow close at 11,433.18 (S&P added 3.41% or 39.43 to 1,194.89). This did take the Dow through 11,200 resistance, but for what? Like one of those old grade B movies from the 1930s where the British expedition reaches the oasis as all are about to perish from thirst. So what? You're still stuck in the middle of the desert. Much good that does. Today's massive move merely brings the Dow to the bottom line of the Jaws of Death from whence it broke down at 11,600 in August. Stocks better start looking for that next oasis.

When are people going to wake up and face it: stocks have been in a primary down trend (bear market) since 2000? 2007's higher high merely put a double top on that bear market, so stocks will languish to 2015 or longer.

Stocks -- how Wall Street makes, and Main Street loses, its money.

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.