Thursday, December 22, 2011

The Gold Price May Have Bottomed At $1,562.50 and Will Now Rally

Gold Price Close Today : 1,608.90
Gold Price Close 16-Dec : 1,595.60
Change : 13.30 or 0.8%

Silver Price Close Today : 2900.10
Silver Price Close 16-Dec : 2961.50
Change : -61.40 or -2.1%

Gold Silver Ratio Today : 55.477
Gold Silver Ratio 16-Dec : 53.878
Change : 1.60 or 3.0%

Silver Gold Ratio : 0.01803
Silver Gold Ratio 16-Dec : 0.01856
Change : -0.00054 or -2.9%

Dow in Gold Dollars : $ 156.15
Dow in Gold Dollars 16-Dec : $ 153.66
Change : $ 2.49 or 1.6%

Dow in Gold Ounces : 7.554
Dow in Gold Ounces 16-Dec : 7.434
Change : 0.12 or 1.6%

Dow in Silver Ounces : 419.07
Dow in Silver Ounces 16-Dec : 400.50
Change : 18.56 or 4.6%

Dow Industrial : 12,153.42
Dow Industrial 16-Dec : 11,860.94
Change : 292.48 or 2.5%

S&P 500 : 1,252.46
S&P 500 16-Dec : 1,219.26
Change : 33.20 or 2.7%

US Dollar Index : 79.944
US Dollar Index 16-Dec : 80.177
Change : -0.233 or -0.3%

Platinum Price Close Today : 1,423.50
Platinum Price Close 16-Dec : 1,417.10
Change : 6.40 or 0.5%

Palladium Price Close Today : 654.50
Palladium Price Close 16-Dec : 622.30
Change : 32.20 or 5.2%

The GOLD PRICE and the SILVER PRICE both lengthened out their correction today. Gold fell another $3 to $1,608.90 and silver fell 19.7c to 2900.1c.

I'm not crying because this doesn't look bad. Markets go up, then they go down. The up part off the Monday lows looked like a market in agreement with itself. Fall from Wednesday peak looked like a market chastened and correcting, but not worried. Today should have marked the limit of the decline.

In any event, it's important for the GOLD PRICE to hold on at the $1,600 level to confirm its intent to rise. Silver's level is not as critical to the whole metals complex right now, because silver is following and not leading. However, it gladdens my eyes that silver has for two days defended the 2900c level. To confirm gold it needs to hold on there, but that's not as critical to a bullish picture as what gold does.

The resistance-to-beat for gold now becomes $1,616, and for silver 2965c.

You've witnessed a fairly rare event, a metals low in December. Only about 40% chance of that.

Paid subscribers know how negative my outlook on silver and gold was when I published the December Moneychanger on 19 December. I HAVE CHANGED MY OUTLOOK. Here's is my changed outlook and strategy.

It now appears that gold MAY have bottomed at $1,562.50 and silver at 2812c. How will we know? Both metals will rally from here, reaching perhaps $1,675 for the GOLD PRICE and 3200c for the SILVER PRICE. Then they will react, correcting downwards toward but not necessarily all the way to those previous lows. IF they can hold those levels, perhaps not quite reaching those levels, AND then turn up again, THAT is our buy signal. If they cannot hold those levels, then we wait to buy. EITHER WAY, we will be buying soon because the bull market has NOT ended and this correction offers us an opportunity to load up the boat. Recent news out of Europe shows that the ECB will print as much money as necessary to try to float Europe out of its bank solvency crisis. In other words, it will repeat the Fed's 2008 inflationary paroxysm. The cause remains, the trend continues. Count on it, and ignore the self-appointed gurus who are prematurely announcing gold's funeral. As we say in the South, they are a "mite previous."

Markets are slowing down before the Christmas holiday. Nobody wants to go home for a long weekend with a big position, so they trim them down and things get quiet. Generally.

I'm writing this about 2:00 p.m., and stocks have inched higher. Dow has risen 45.65 (0.38%) to 12,153.42; S&P500 is up 8.74 (0.7%) to 1,252.46.

The Great Milestone for the Dow is at 12,200. If it fails there, it's curtains, because it will be the third time, and on charts, third time isn't the charm, it's the calamity.

US DOLLAR danceth yet with the 80 level, trading now down 7.8 basis points (0.1%) at 79.944. Appears that yesterday saw the low for the dollar's correction at 79.20. The uptrend line today stands a tad below that level, so the US dollar remains in its upward trend.

Euro lost a tiny 0.04% to 1.3045. It is destined for lesser things, say, 1.200. The yen is looking a bit iffy, stalled right on the bottom of the range as if trying to break down. Now at 127.93c/Y100 (Y78.17/$1).

HOUSEKEEPING: I will be out of the office to celebrate Christmas so will not be sending commentaries tomorrow, 23 December, through Monday, 26 December. We will be in the office during the 12 Days of Christmas only for limited hours. Our regular schedule resumes 4 January 2012. Merry Christmas and may God bless and prosper y'all in 2012 and always!

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.