Tuesday, February 21, 2012

The Gold Price has the Wind in it's Sails Knocking Down Resistance Through $1,750 Can it Close Higher Still Tomorrow?

Gold Price Close Today : 1757.10
Change : 32.60 or 1.89%

Silver Price Close Today : 3441.30
Change : 121.3 cents or 3.65%

Gold Silver Ratio Today : 51.059
Change : -0.884 or -1.70%

Silver Gold Ratio Today : 0.01959
Change : 0.000333 or 1.73%

Platinum Price Close Today : 1687.10
Change : 49.10 or 3.00%

Palladium Price Close Today : 710.60
Change : 15.60 or 2.24%

S&P 500 : 1,362.21
Change : 0.98 or 0.07%

Dow In GOLD$ : $152.54
Change : $ (2.68) or -1.73%

Dow in GOLD oz : 7.379
Change : -0.130 or -1.73%

Dow in SILVER oz : 376.77
Change : -13.29 or -3.41%

Dow Industrial : 12,965.69
Change : 15.82 or 0.12%

US Dollar Index : 79.06
Change : 0.115 or 0.15%

Last three days of last week silver and the GOLD PRICE steadfastly refused to drop further, even though gold hit a low of $1,705.60 on 16 February -- and then closed $21 higher. Now we are left with the interpretation that both have been undergoing a correction within a rally, that the rally ain't over yet, and that gold will reach $1,805 or higher before the rally ends and a bigger correction sets in.

The GOLD PRICE today closed a little higher than its last peak, up $32.60 to $1,757.10 (versus $1,756.80 at the 2 February peak, when all this fun began). On Friday it closed at $1,724.60, so it knocked down all the gates of resistance around $1,730, $1,740, and $1,750. Hard to imagine that it won't follow through tomorrow with a higher close still. It closed near the high for the day ($1,759.43). Only thing that could gainsay higher prices and a continuing rally would be a close below $1,725 tomorrow. Otherwise gold has the wind in its sails.

Gold leapt 1.9% but the SILVER PRICE pulled on its 7-league boots and vaulted 3.7%! High came at 3445c, and silver closed near that at 3441.3c, up 121.3c.

Low last week arrived on Thursday at 3262c, then over the next three days the SILVER PRICE kept bouncing against 3360c, like a helium balloon patting on the ceiling. Once it cleared 3380c in Europe, it was bound to break 3400c and run higher in the US.

Pointing to better things still, silver has now reached its 300 day moving average (3468c) once again. 200 DMA is not much higher at 3495c. When silver crosses that line, buyers will pile on. Silver has in it 3570c at least, and maybe 3900c.

Unless contradicted by lower closes tomorrow, gold and silver will move higher.

On Friday, 24 February, I will be speaking for the Fayette County (Tenn.) Tea Party at the Fayette County Courthouse, in the town square at Somerville, Tennessee. Party starts at 7:00 p.m., and the topic will be "Restoring Freedom by Rebuilding Local Economy." This may be your only chance to see a natural born fool from Tennessee live and outside captivity.

When you put three men all anxious to get home to their wives in a car, you throw the brains right out the window. We started out from Houston Friday at 2:00 p.m. and arrived at my house at 5:30 a.m. Brainless.

Looking at markets, you can't afford to wear blinders. You have to look at markets that feed back on each other, and inwardly you have to look at more than a market's close. If something doesn't fit, that's probably because it really doesn't fit, and something is up.

Today, it appears for the nonce, that Greek Debt Deal was finally accepted. Just wait to see how permanent that is. Reports I hear from Greece indicate a level of economic suffering that can't be maintained.

Today came the answer to my riddle last week, Why have silver and gold not fallen further, following through on their repulse at $1,750? Answer is, Because they are strong, and haven't yet completed the upward move that began from the 29 December bottom.

Today the headlines crowed that the Dow hit 13,000, and it did, 13,005.04 as a matter of fact, highest since May 2008, but -- whoops! -- it didn't close near there. Meanwhile, if you merely glance at today's chart, you will notice that the Dow climbed up a mountain, then fell off the mountain from about 1:30 onwards, closing at 12,965.69, up only 15.82 points (0.12%) and 40 points lower than the high. Now glance over at the Dow in Gold Dollars, and you'll see that it in fact DROPPED G$2.68, about an eighth of an ounce and way below the last high.

Meanwhile, the S&P500 rose 0.98 point, a noteworthy 0.07%, to 1,362.21.

Now I will give y'all that if the Dow intended to clear 13,000, it might first bounce off and try again, but today's chart indelibly resembles a market running clean out of steam and fainting. I also wonder why amidst this general jubilating the NASDAQ dropped 0.11% and the Russell 2000 dropped 0.7%. Not everybody in the choir is singing the same tune. Why not?

The US dollar index gave up 11.5 basis points (0.15%) to close 79.058, down over 50 basis points from a week ago. The euro gained 0.75%, but the jubilators might want to notice that price didn't reach the last peak, which it must BEST to rally further. The yen has spent the last three weeks dropping. Today it dropped another 0.21% to 125.46c/Y100 (Y79.71/US$1).

Being no more than a natural born fool and not one of them genius economists, I am plain bumfuzzled by the popular belief that when the US dollar drops, it is good for stocks. But wait. If the dollar drops, that signals inflation or some monetary problem, and that introduces confusion into the entire economy, so explain to me exactly why the dollar dropping is good for stocks?

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.