Thursday, January 26, 2012

The Gold Price Broke out Above it's Downtrend and Traded Above the 200, 150, 50, and 20 Day Moving Averages

Gold Price Close Today : 1726.70
Change : 26.60 or 1.6%

Silver Price Close Today : 3370.20
Change : 61.0 cents or 1.8%

Gold Silver Ratio Today : 51.234
Change : -0.141 or -0.3%

Silver Gold Ratio Today : 0.01952
Change : 0.000053 or 0.3%

Platinum Price Close Today : 1609.00
Change : 31.50 or 2.0%

Palladium Price Close Today : 690.45
Change : -2.55 or -0.4%

S&P 500 : 1,318.45
Change : -7.60 or -0.6%

Dow In GOLD$ : $152.47
Change : $ (2.63) or -1.7%

Dow in GOLD oz : 7.376
Change : -0.127 or -1.7%

Dow in SILVER oz : 377.88
Change : -7.62 or -2.0%

Dow Industrial : 12,735.31
Change : -21.65 or -0.2%

US Dollar Index : 79.40
Change : -0.177 or -0.2%

Silver and GOLD PRICE added more credibility to their résumé today, pushing higher after upside upside breakouts. GOLD gained $26.60 (1.8%) to $1,726.70 while silver added 61c (1.8%) to close Comex at 3370.2, within easy spitting distance of our 3400c target.

The GOLD PRICE pushed aside the $1,705 resistance like King Kong pushing down New York City streetlights, and sprang clean to next resistance around $1,725.

What more can you ask? Gold has (1) broken out above its downtrend line from September, and (2) traded above the 200, 50, 20, and now 150 day moving averages. Momentum hardly gets more unanimous than that.

Road for gold stretches out to $1,800. Someday will come a correction, not too long looking at the RSI, but not before gold makes more gains.

The SILVER PRICE traded overnight barely below 3300c, at 3297.5c, then climbed like a stubborn Sherpa all day to a 3377.5c high. Comex close at 3370c came very close to the day's high.

Here are the bounds: the SILVER PRICE must not close below 3300c, and must exceed 3400c to keep on rallying. With the world's largest central bank announcing that it will most surely keep on depreciating the dollar, what else would you expect silver to do? If you don't buy the silver breakout at 3400c, you'll never buy anything. It screams too loudly that it intends to move higher.

All that said, remember humility and recall that markets turn on a dime. Closes below 3300c or $1,700 gainsays everything above.

German chancellor Ferkel spoke at the Davos economic forum yesterday, coinciding with the FOMC's actions here. Coincidence? Or timed to manipulate fall of the dollar against the euro? No matter, she said nothing new. Crisis continues to be the elephant in the living room.

An Israeli website reported yesterday that India has agreed to pay for Iranian oil with gold. Not sure whether this can be believed, but if it's true it is a flashing harbinger of change.

Markets followed through today as expected from yesterday: gold and silver up, dollar down, stocks down. Maybe inflation isn't the universal economic panacea after all -- but what do I know? I'm no central banker, I'm just a natural born fool from Tennessee, not rating even 3 MLCs on the Scientific Stupidity Scale.

STOCKS melted when they approached the Kryptonite of last spring's highs. Dow gave up 21.65 (0.17%) to close 12,735.31 while S&P500 lost 7.60 (0.57%) to close 1,318.45. Dow below 12,650 will accelerate the fall.

More instructive is the last few days' behavior of the Dow in Gold Dollars (DiG$) and the DiSoz. From G$164.94 (7.969 oz) on 29 Dec. the DiG$ has fallen to G$152.47 (7.376 oz) today. From 450.5 oz the DiSoz has plunged to 377.88 oz today. Since the December highs showed upside breakouts on the chart, their retreat and failure now underlines one future: silver and gold will gain much more value against stocks, or, stocks will lose more value against metals. Same thing.

US DOLLAR INDEX today fell 17.7 basis points (0.23%) to 79.402. This further fall below 79.50 merely confirms that the dollar has broken down from its uptrend. Low came at 79.07, and dollar may be forming a rounding bottom there, which would send it higher for a few days. Owch, it's below its 50 DMA (79.59). Lower closes will simply nail more nails into the dollar's coffin.

Euro took a breather today, closing down 0.02% (nothing, basically) to 1.3104. Must remain above 1.3050 or foster suspicions that the ultimate bottom for the euro's long move is not yet behind us.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2012, 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.