Monday, March 05, 2012

Gold Price Fell Below the Critical $1,705 Support How Far Can it Fall?

Gold Price Close Today : 1703.00
Change : (5.80) or -0.34%

Silver Price Close Today : 3365.10
Change : 83.0 cents or -2.41%

Gold Silver Ratio Today : 50.608
Change : 1.050 or 2.12%

Silver Gold Ratio Today : 0.01976
Change : -0.000419 or -2.07%

Platinum Price Close Today : 1660.00
Change : -36.30 or -2.14%

Palladium Price Close Today : 707.00
Change : -9.20 or -1.28%

S&P 500 : 1,364.33
Change : -5.30 or -0.39%

Dow In GOLD$ : $157.35
Change : $ 0.37 or 0.24%

Dow in GOLD oz : 7.612
Change : 0.018 or 0.24%

Dow in SILVER oz : 385.21
Change : 8.84 or 2.35%

Dow Industrial : 12,962.81
Change : -14.78 or -0.11%

US Dollar Index : 79.36
Change : -0.031 or -0.04%

It wasn't a great day for the silver or
GOLD PRICE. Gold dropped down to $1,694.93 to feel around with its toes for a bottom, then closed Comex at $1,703.00, down 5.80 but more damaging to morale, below critical $1,705 support. Gold tried to move higher today but was stopped cold at $1,713.

What bothers me is that the GOLD PRICE closed below its 150 day moving average ($1,715.09) which pushes momentum downward. Gold might catch at the 50 DMA, $1,687.30, or might drop to the 200 DMA at $1,673, but in any event it looks like this week will be painful.

The SILVER PRICE dropped 2.4% (83c) to 3365.1c. That lands silver below the crucial 300 DMA (3485), way below it. Face it, that augurs lower prices, and offers 3250c to 3200c as a low.

Watch. Let's see what unfolds. I'm not expecting a gigantic drop, but this week silver and gold will probably struggle. A gold close above $1,725 would gainsay that.

Today was a day of trifling and bewilderment. Stocks sank to the scalp, dollar burped back some of Friday's gains, silver and gold suffered losses not apparently large, but significant still. Here's a closer look.

Dow dropped 14.78, down 0.11% to 12,962.81. looking at the lines, they have dropped out or are about to drop out of the deadly rising wedge forming since last October. Dow cut through, but did not stay below, its 20 day moving average (12,920.88), barely saving face for its momentum.

S&P500 did no better, down 5.3 (0.39%) to 1,364.33. These rising wedges do not end well for bear markets, falling out downside -- and sharply -- almost every time.

Should the Dow break 12,880 (today's low), wave bye-bye. Quickly.

US dollar index dropped 3.1 basis points today, nothing, to end at 79.359, still crowing above that 79 level. Euro gained 0.14% today to close $1.3217, but the one year chart has peaked and should drop like the back side of the Matterhorn. Yen tried again today to bottom, closing at 122.62c/Y100 (Y81.56/US$1). Yen remains severely oversold, but gives only feeble signs of turning up.

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.