Thursday, January 19, 2012

Gold Price Closed at $1,654.10 Does the Five Day Chart Suggest a Slide Back Toward $1,605?

Gold Price Close Today : 1654.10
Change : (5.40) or -0.3%

Silver Price Close Today : 3048.20
Change : -3.2 cents or -0.1%

Gold Silver Ratio Today : 54.265
Change : -0.120 or -0.2%

Silver Gold Ratio Today : 0.01843
Change : 0.000041 or 0.2%

Platinum Price Close Today : 1518.50
Change : -6.00 or -0.4%

Palladium Price Close Today : 676.50
Change : 7.60 or 1.1%

S&P 500 : 1,314.50
Change : 6.64 or 0.5%

Dow In GOLD$ : $157.77
Change : $ 1.09 or 0.7%

Dow in GOLD oz : 7.632
Change : 0.053 or 0.7%

Dow in SILVER oz : 414.15
Change : 1.91 or 0.5%

Dow Industrial : 12,623.98
Change : 45.03 or 0.4%

US Dollar Index : 80.05
Change : -0.560 or -0.7%

Both the GOLD PRICE and the SILVER PRICE performed badly today. GOLD fell $5.40 to close comes at $1,654.10. That wasn't what left the burr under my saddle, though. It was a new high for the move at $1,669.92 followed by a lower close. That's the first part of a key reversal, and will be confirmed if gold closes lower again tomorrow.

An ominous double top (at $1,670) dominates the 5-day GOLD PRICE chart. A break through $1,645 puts gold on a slide back toward $1,605.

The SILVER PRICE lost only 3.2c, but again posted a possible key reversal. Reached a new high for the move, 3087c, but then closed lower at 3048.2. 5-day chart looks worse, with a formation that is not quite but almost an island reversal. From here SILVER would have to hold on at 3040c to continue rising. Otherwise, we're looking at another trip to 2980c.

I've been thinking about the Dow in Gold Dollars and the Dow in Silver Ounces. Both have been rising , silver since its April highs and gold since gold's August high. (Remember, the DiG$ or DiSoz RISE when silver or gold are outrunning stocks and fall when metals are lagging stocks).

Dig's looks like it has topped, but is above the 200 DMA and might still run to G$170 (8.224 oz of gold). DiSoz must turn around soon from its present 415 oz or will climb toward resistance at 500 oz.

What does this imply? That stocks may be about to outperform silver and gold for a while.

Gold's turning back at $1,670 (assuming it follows through downward tomorrow) also sets both metals up for a test of the December lows.

Get ready to buy.

Big news today was the Dow poking its head through 12,600 to close at 12,623.98, up 45.03 or 0.36%. Likewise the S&P500 rose 6.64 (0.5%) to close at 1,314.50.

A reader pointed out to me yesterday that I might be missing an upside down head and shoulders in stocks, and he may be right. However, if stocks rally above this level, it will be a trap for bulls that will collapse to their grief within short months.

Other big news came from the euro, which made good its escape through the downtrend line and cleared the 20 day moving average (1.2898) today to close at 1.2965, up 0.84%. Assuming it closes above the downtrend line tomorrow, the euro will have a minimum target of 1.325. This doesn't represent any underlying strength or reform, only a technical reaction to the long fall from 142.47 in October. Euro still stinks worse even than the US dollar.

The US dollar index fell 56 basis points (0.72%). Recall that 60% of the dollar index' value is determined by the euro. Now trading at 80.05, barely above 80. That certainly cracks the uptrend line, and leads to conclusion the dollar will fall at least to its 50 DMA at 79.32.

Japanese Yen lost 0.4% to 129.71c/Y100 (Y77.10/US$1). 'Twas a nasty fall, punching through but not staying below the 20 DMA (129.46). 50 DMA isn't far away at 129.13. Should the Yen close blow that, well, it's headed for 128 again.

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.