Friday, January 27, 2012

The Gold Price Correction has Ended, Gold can hit $2,600 this Year

Gold Price Close Today : 1,732.20
Gold Price Close 20-Jan : 1,663.70
Change : 68.50 or 4.1%

Silver Price Close Today : 3374.7
Silver Price Close 20-Jan : 3164.7
Change : 210.00 or 6.6%

Gold Silver Ratio Today : 51.329
Gold Silver Ratio 20-Jan : 52.571
Change : -1.24 or -2.4%

Silver Gold Ratio : 0.01948
Silver Gold Ratio 20-Jan : 0.01902
Change : 0.00046 or 2.4%

Dow in Gold Dollars : $ 151.32
Dow in Gold Dollars 20-Jan : $ 158.05
Change : $ (6.73) or -4.3%

Dow in Gold Ounces : 7.320
Dow in Gold Ounces 20-Jan : 7.646
Change : -0.33 or -4.3%

Dow in Silver Ounces : 375.74
Dow in Silver Ounces 20-Jan : 401.95
Change : -26.21 or -6.5%

Dow Industrial : 12,680.14
Dow Industrial 20-Jan : 12,720.48
Change : -40.34 or -0.3%

S&P 500 : 1,318.01
S&P 500 20-Jan : 1,315.38
Change : 2.63 or 0.2%

US Dollar Index : 78.883
US Dollar Index 20-Jan : 80.155
Change : -1.272 or -1.6%

Platinum Price Close Today : 1,621.80
Platinum Price Close 20-Jan : 1,530.50
Change : 91.30 or 6.0%

Palladium Price Close Today : 688.50
Palladium Price Close 20-Jan : 673.85
Change : 14.65 or 2.2%

Today the GOLD PRICE rose $5.50 to $1,732.20 and silver rose 4.5c to 3374.7c.

The SILVER PRICE gained 6.6% this week, gold gained 4.1%. Meanwhile, they also bludgeoned their way through two or three resistance levels. This is about as good a week's performance as I have ever seen.

On Wednesday, thanks to the Bernancubus Fed's announcement they will continue jimmying interest rates down and inflating until 2014, gold shot from $1,670 to $1,705 in a single bound, smashing down $1,680 resistance. Next day it pierced $1,705 AND $1,725.

That carries GOLD PRICE through the downtrend line from September a full three percent and three days, proof enough it is a solid breakout. And for good measure gold also rose above its 150 DMA ($1,686), the rarely broken safety net under gold's bull market.

This week SILVER beat 3260c, then 3300c and 3350c and now stands knocking at the 3400c door, where it meets stout resistance. Most important goal here is for silver to climb above its 300 DMA. During this bull market silver has only rarely broken below this moving average. Whenever it crosses above it again, silver is offering you an extremely low-risk buying point.

Some time or other a correction will come. One target is the 200 DMA at 3575c, about where some lateral resistance also abides. Should silver pierce that mark, nothing stands in its way before 4000c.

RSI on both metals stands at 70, pushing the ceiling for overbought, but overbought can easily get MORE overbought and stay there longer than expected.

Big Picture has come into focus. The SILVER and GOLD PRICE correction has ended, but may correct and bump along sideways for the first quarter or two. Nonetheless, both are headed much, much higher. Gold can hit $2,660 this year, silver might hit 7600c, even 8300c.

Is the bull market over? Merciful heavens, NO! The wild part of the ride is only now beginning.

At the end of the football game, what do y'all do? You look at the scoreboard, right? Because even though the game may be fun at the end all that counts is that scoreboard. This week's board says that stocks are spinning wheels, US dollar is backing down the hill with transmission problems, and silver and gold are blasting ahead down the road.

Most notable this week was NOT the metals huge gains, although that was notable enough, but stocks' fall against the metals. On 29 December the Dow in Gold Dollars hit G$164.94 (7.969 oz). Today it's at G$151.32 (7.320 oz), down almost 9% although stocks have risen 3.2% (Dow) and 4.4% (S&P500).

Since 29 December the Dow in Silver Ounces has plunged from 450.5 oz. to 375.74 oz today, falling 16.6%. Instructive.

That 29 December high took both indices to new highs for the move, and for silver, above the long term downtrend line. The outcome until today shows that the tide in stocks versus metals has turned down again, and stocks have begun to lose another 80% of their present value against stocks.

Dow closed today at 12,680.14, down 54.49 (-0.43%) and the S&P500 at 1,318.01, lower by 0.42 (0.3%). This week has shown stocks unable to sustain the enthusiasm of the year's opening. Unless the Dow exceeds 12,850 and the S&P500 1,360, which I do not expect, their next leg will be down -- very much down. Acceleration begins when the Dow drops through 12,600.

The US Dollar did NOT have a good week. It broke support about 80, then 79.5, and today hit itself in the head with a ball peen hammer by dropping another 51.2 basis points (0.66%) to 78.883. Dollar now is trading below its 50 day moving average (79.64) and may be headed for its 200 DMA (76.49).

The euro has profited from the dollar's slide, gaining 0.93% today alone to reach my minimum target of 1.3200. Closed at 1.3237, will rise further next week.

Yen offers a classic snapshot of government manipulation. Gapped down on Tuesday, traded down to support, then gapped UP today. Closed today at 130.35c/Y100 (Y76.72/US$1), up 0.91%. So, let's see -- yen crashed on Tuesday, falling through its 20 DMA and 50 DMA, but today turned right around and shot back up, closing higher than it began the week? If that ain't Nice Government Men in action, canaries have fangs.

Y'all enjoy your weekend!

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.