Wednesday, February 08, 2012

Gold Price Lost $17.10 Today a Close Below $1,710 Will Drag Gold Further Down

Gold Price Close Today : 1729.30
Change : (17.10) or -0.98%

Silver Price Close Today : 3367.30
Change : 49.20 cents or -1.44%

Gold Silver Ratio Today : 51.356
Change : 0.239 or 0.47%

Silver Gold Ratio Today : 0.01947
Change : -0.000091 or -0.47%

Platinum Price Close Today : 1663.50
Change : 13.20 or 0.80%

Palladium Price Close Today : 713.75
Change : 6.30 or 0.89%

S&P 500 : 1,349.96
Change : 2.91 or 0.22%

Dow In GOLD$ : $154.01
Change : $ 1.59 or 1.04%

Dow in GOLD oz : 7.450
Change : 0.077 or 1.04%

Dow in SILVER oz : 382.62
Change : 5.68 or 1.51%

Dow Industrial : 12,883.95
Change : 5.75 or 0.04%

US Dollar Index : 78.61
Change : 0.037 or 0.05%

Both the GOLD PRICE and the SILVER PRICE fell back from the top of their recent trading ranges, gainsaying all yesterday's showy performance. GOLD PRICE fell $17.10 to a Comex close at $1,729.30 and silver tumbled right along with it, losing 49.2% to settle at 3367.3c.

GOLD PRICE jaws were slapped by a $1,751.50 high. It wasn't hit hard enough to fall below $1,725, but today argues that it will sink further. A close below $1,710 will drag gold much further down, and it remains plumb on its uptrend line, a precarious perch.

SILVER PRICE fell back to the 3360c support/resistance, leaving behind a pattern that looks awfully top-heavy and that has broken its uptrend line. Silver closed at 3367.3, near the day's low at 3362c.

If silver could punch through that 300 day moving average overhead at 3453c, then it could fly. However, the 300 DMA seems to be winning this wrestling match. A close below 3290c will confirm that silver is being thrown.

Got to be honest here, if a bit anxious. Silver has already made two bottoms at 2615c, and triple bottoms don't exist. Therefore t'would ease anxiety if silver dropped no further than its 50 DMA (3104c), then resumed climbing.

But we watch and wait for the market to tell us -- we don't tell the market. Surprises like today's, a sharp drop after a muscular climb, remind us of humility, and that markets can do whatever they want. Hence it is NOT unthinkable that silver might turn tomorrow and break upwards through the 300 DMA. I reckon a failure in the Great Greek Debt Deal might send money scurrying into gold unexpectedly. Given the euro's strength today, markets clearly expect the Greeks to buy the deal. If they do, it will be time to sell the euro again, because It Won't Get Any Better Than That for a while.

Well, once again today, a Greek Debt Deal is Near. Near, as in the comparative form of "nigh", meaning that it is more nigh that it was a week ago. Or, at least a default draws nigher.

Last on the euro is 1.3263, up 0.03% although no Debt Deal has yet been inked. 'Twould be a nasty awakening for all those folks who have gone long euros should the Greeks balk and the deal fall through.

US dollar index is holding its breath today, too. Rose a piddling 3.7 basis points (0.05%) to 78.613. Interesting that the dollar index still mulishly evades a decisive and plainspoken break through 78.50.

The yen, on the other ocean, had no problem sinking through its 20 DMA (130.15c) to 129.9c/Y100 (Y76.98/US$1), down 0.29%. Psychologically any close through a round number like "130c" smashes investor morale. Bottom of this range enters about 129.35c, the 50 DMA. Below that the range's bottom boundary crosses about 127.75c.

Stocks were displeased that the Greek Debt Deal drew no nearer, as they had been waiting on it all day. Dow ended up 5.75 points after spending most of the day lower, sort of like saying, "Well, look on the bright side -- at least your submarine didn't SINK." Dow closed at 12,883.95. S&P500 rose 2.91 to close at 1,349.96.

Pretty amazing that little Greece could discombobulate mighty Wall Street. Does that hide in its bosom a message?

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.