Tuesday, December 06, 2011

Gold Price Near the Trendlines is a Good Time to Buy

Gold Price Close Today : 1727.90
Change : (2.80) or -0.2%

Silver Price Close Today : 3267.2
Change : 36.6 cents or 1.1%

Gold Silver Ratio Today : 52.886
Change : -0.686 or -1.3%

Silver Gold Ratio Today : 0.01891
Change : 0.000242 or 1.3%

Platinum Price Close Today : 1519.70
Change : -1.00 or -0.1%

Palladium Price Close Today : 668.25
Change : 36.40 or 5.8%

S&P 500 : 1,258.47
Change : 1.39 or 0.1%

Dow In GOLD$ : $145.36
Change : $ 0.87 or 0.6%

Dow in GOLD oz : 7.032
Change : 0.042 or 0.6%

Dow in SILVER oz : 371.88
Change : -2.59 or -0.7%

Dow Industrial : 12,150.13
Change : 52.30 or 0.4%

US Dollar Index : 78.62
Change : 0.049 or 0.1%

I have to sort of break the rules today for the GOLD PRICE. I say "sort of" because nowadays the gold market runs 24 hours, so closes aren't quite as dispositive as once they were.

Here's what I mean: Yesterdays GOLD PRICE closed at $1,730.70 on Comex, and today at $1,727.90, ostensibly "down" $2.80.

But when you looked at what happened in the market AFTER Comex closed, instead of merely posting two down days, gold actually traced out something like a key reversal to the upside.

Here's where I'm stretching the rules. A key reversal occurs when a market trades into new low territory, then closes higher at day's end. Second half confirms when it closes HIGHER the next day.

Yesterday after Comex closed the Globex market traded down to $1,717. Then overnight the GOLD PRICE kept on dropping, and posted a low at $1,702.47 (neatly defending, by the way, the $1,700/$1,705 support). That low came while New York was open, about 10:00, and the rest of the day gold climbed like a Sherpa. By my math, $1,727.90 is higher than $1,702.47, and after gold had come under that attack, and been driven down so far, to come back nearly to unchanged -- viewing the whole 24 hours together -- looks like a market turning up. It also left behind an upside-down head-and- shoulders-ey chart, with a $1,720 neckline.

The GOLD PRICE stopped today at $1,730 -- actually, is trading a bit above that now at $1,730.45. Tomorrow gold must not trade below $1,725 and must climb and close above $1,730 or 'twill explode my rule-stretching theory.

Add to my upside suspicions silver's behavior today. It rose 36.6c to close Comex at 3267.2c. Mmmm -- silver rose 1.1% while gold dropped minutely. I have to call that a BULLISH divergence.

The SILVER PRICE chart last two days looks like a reversal, too, provided tomorrow it clears 3300c, or at worst doesn't close below 3250c.

For the nonce and until gainsaid, I interpret the last few days' moves in silver and gold to be "reactions back to support", that support being the rising boundary of an even-sided triangle. Closes below those lows mentioned above would cancel that interpretation.

Be advised that coming shortly is some break out of those even-sided triangles, up or down. For now, though, these prices near the trendlines offer good places to buy. Should they drop more, I will buy more.

Just as people used to ask me in the years running up to the real estate peak in 2006, "Do you really mean that I should sell my house?" so today they ask me, "Do you REALLY mean that I should cash in my IRA?" Answer in both cases is, "Yes. Yes."

My fear is that if you don't, the federal government will one day decree that your IRA can only invest in US government bonds. Where will you be then? Anyway, one owneth not what one controlleth not, and thou controllest not thine IRA, the government doth. If that's not true, then why do you have to pay a penalty and tax to take possession of it? In my little natural born fool's mind, anything I don't control doesn't really belong to me yet.

Quaint, I know, but realistic. Hidebound Tennessee.

For all the hu-hu yesterday about the Great Fix in Europe, the euro did well to keep its lips above water today. Ended at 1.3409, up a bit, 0.7% -- enough to see, I reckon, if you have a microscope handy. Yen rose also to 128.73c per Y100 (Y77.68/$1).

US DOLLAR INDEX stubbornly refuses to to bow to Euro-exuberance by sinking below 78.50. Today trading at 78.619, up 4.9 basis points, a tiny 0.06%.

Since Friday the trend has been up, with higher lows and higher highs. Must-hold line is the uptrend line at 78.45. Long as the scrofulous dollar holds that line, it points up.

Dow Jones Industrial Average today rose an uncertain 52.3 points (0.43%) to 12,150.13. S&P500 rose 1.39 (0.11%, even more uncertain), to 1,258.47.

Okay, ask me why I think 12,200 puts the cap on any stock market rally? Glad you asked! Because going back to November 2010 you can draw a line from the 11/10 top across the bottoms in 2011 and you will see a massive, undeniable head and shoulders top.

That HandS is confirmed by a gigantical drop in August once it closed through the neckline, from 11,900 to 10,604. All the moiling since then has done no more than take the Dow back up to that neckline for a Final Kiss Good- Bye before it falls to perdition.

O, the weeping and wailing and woe! It draws ever nearer.

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.