Thursday, March 08, 2012

The Gold Price Would have to Close Above $1,715 to Complete Correction

Gold Price Close Today : 1698.10
Change : 14.80 or 0.88%

Silver Price Close Today : 3378.90
Change : 24.6 cents or 0.73%

Gold Silver Ratio Today : 50.256
Change : 0.073 or 0.14%

Silver Gold Ratio Today : 0.01990
Change : -0.000029 or -0.14%

Platinum Price Close Today : 1663.00
Change : 28.75 or 1.76%

Palladium Price Close Today : 708.00
Change : 19.50 or 2.83%

S&P 500 : 1,365.91
Change : 13.28 or 0.98%

Dow In GOLD$ : $157.13
Change : $ (0.50) or -0.32%

Dow in GOLD oz : 7.601
Change : -0.024 or -0.32%

Dow in SILVER oz : 382.02
Change : -0.70 or -0.18%

Dow Industrial : 12,907.94
Change : 70.61 or 0.55%

US Dollar Index : 79.23
Change : -0.485 or -0.61%

GOLD PRICE pushed nearly to the crucial resistance at $1,705 with a $1,703.80 high today. Closed below the $1,700 at $1,698.10 on Comex, up $14.80.

Even if the
GOLD PRICE climbs to $1,715 it won't convince me that it has completed its correction. Nope, it would have to close ABOVE $1,715, maybe $1,725.

SILVER PRICE didn't gain as much as gold today, so the GOLD/SILVER RATIO rose from 50.183 to 50.256. That non-confirmation itself jaundices the eye.

Silver added 24.6c to close Comex at 3378.9c. It bounced to 3415c, but resistance at that height wrestled silver back down to that 3378.9. Above 3400c more resistance awaits, stoutly armed, at 3450c.

What if I am wrong? Well, in that alternate universe silver has only corrected back down to and slightly violated that down trend line it broke through in mid-March, and day before yesterday's low just above the 50 DMA played out the oft-seen touchback ("Final Kiss Good-bye") that proves the breakout. Possible, but I can't get into that universe from here. The chart and my suspicion are jamming my de-materializer.

Unlike some folks, I don't mind saying "I told y'all so" especially when it concerns rotten parasites in banking and government. CNBC on 6 March reported "Huge Spike in Repeat Foreclosures." "Thousands of foreclosures that were stuck in process due to delays over the so-called 'Robo-signing' paperwork scandal are working their way through a revamped banking system and heading toward final bank repossession."

When the state attorneys general announced their big compact with the big banks about robo-signing, which the banks signed so they could re-create mortgage documents they lacked for foreclosure, I told y'all that it was a deal of, by, and for the banks. They gave up a piddling $2,000 a head to those they had wronged, and in return got government- encouraged rewriting of mortgages to perfect their bad title. Thus were the mortgagees lured to their doom. Foreclosure surged 28% in January. Only one question remains, Were the attorneys general snookered, or corrupted?

Odd, odd, 5 day gold and Dow charts share a resemblance, so I reckon I am going to have to tell y'all to listen to what I mean, not what I say.

Yesterday I made much of stocks' and gold's and silver's failure to rise above their breakdown points as proof they were in trouble, but today they rose into those areas. Does that disprove my argument? Not in my view. Markets can ease up into that area where they broke down, and still follow through downside. They can even keep on rising above the breakdown, and leave behind a deadly double top, an even surer sign that they will drop more.

Okay, so interpreting a chart is an art. When I paint y'all a picture, I don't always have time to tell you how to wash out the brush.

Start with stocks. On a five day chart they today rose through the 12,850 area I mentioned yesterday. Dow added 70.61 points to close 12,907.94 (0.55%). That's still below the breakdown at 12,950 (exactly), and might become only a double top by reaching for 13,000.

Why would I look for a double top? Context. Background. This break and recovery is played out against an aging (since 1 October 2011) rally, that (2) built into a large, VERY bearish rising wedge. It asketh a whole lot to expect a market that long growing overbought to extend a rally. Add (3), the Dow today closed below its 20 day moving average (12,915.74).

Any way you cut it, it's over for the Dow for a while. S&P500 tagged along, rising 0.98% (13.28) to 1,365.91. Y'all watch: truth is the daughter of time.

The US DOLLAR INDEX lengthened its correction by dropping a meaty 48.5 basis points (0.62%) to 79.227. Dropping below 79.30 was sloppy, and a low at 79.163 looks positively slovenly. But what is the dollar trying to protect? Really just that 79.00 psychological support and the 20 DMA (79.06). It will probably hold and the dollar will resume advancing.

What goosed stocks today and the euro with them? The deadline for the elusive Greek Debt Deal passed with a "majority" of investors signing on. Thus the world waxes again optimistic, until the Deal comes unglued again, as 'twill, and soon. Euro gained 0.92% (big for a currency) to 1.3270. Here's another reason why I wouldn't trade currencies even with your money, because this reaction is wholly irrational. BWDIK? Not a single currency in the world is worth backed by as much as a bus token.

The wave of schizo-optimism pushed traders out of the yen today. It dropped 0.58% to 122.62c/Y100 (Y81.55/US$1). Looks looney. Two gappy reversals in three days. Help.

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.