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Tuesday, July 10, 2012

The Gold Price Closed $1,579.30 Teetering on the Edge but Bull Markets Usually Resolve Upside

Gold Price Close Today : 1579.30
Change : -9.30 or -0.59%

Silver Price Close Today : 2685.10
Change : -56.0 or -2.04%

Gold Silver Ratio Today : 58.817
Change : 0.862 or 1.49%

Silver Gold Ratio Today : 0.01700
Change : -0.000253 or -1.47%

Platinum Price Close Today : 1427.00
Change : -23.40 or -1.61%

Palladium Price Close Today : 575.30
Change : -15.35 or -2.60%

S&P 500 : 1,341.47
Change : -10.99 or -0.81%

Dow In GOLD$ : $165.62
Change : $ (0.10) or -0.06%

Dow in GOLD oz : 8.012
Change : -0.005 or -0.06%

Dow in SILVER oz : 471.23
Change : 6.59 or 1.42%

Dow Industrial : 12,653.12
Change : -83.17 or -0.65%

US Dollar Index : 83.40
Change : 0.282 or 0.34%

Mercy! The GOLD PRICE made it one day, and lost it the next. Worse than tourists at Las Vegas. GOLD today lost $9.30 to close Comex at $1,579.30. Silver lagged not far behind, dropping 56 cents to 2685.1c.

Recall what I wrote yesterday about the even-sided triangle gold has scratched out. Today the bottom triangle boundary stands about $1,550; gold's low touched $1,564.57. 'Tis the triangle's nature to ping-pong back and forth betwixt top and bottom limits. Gold just better not break that lower frontier.

So strong was my curiosity about that lower boundary wax that I went back to the two year chart, and LO! What found I there? That a line drawn from the November 2010 high at $1,424.30 through the December 2011 low at $1,523.90 supports the declines of mid-2011 and most of the lows since August 2011. Plainly, that's very strong support, which favours the GOLD PRICE. However, gold has fallen below its 50 day moving average ($1,595.90) and 20 DMA ($1,595.92). That leaves things teetering on the edge, but remember: "It's a bull market, and bull markets usually resolve to the upside." On our side also is this correction's age, arguing that the bottom is behind us.

The SILVER PRICE chart offers no such comfort. That is, you can draw a line from the January 2011 bottom at 2630c to the September 2011 low at 2615c to the December 2011 trough at 2615c and the June low at 2610c. This line is the last ditch.

But silver specializes in last ditches, and in scaring the life out of you. Remember November 2008 when the SILVER PRICE hit 880c, losing 105% of the foregoing gain? Wasn't enough aspirin in Tennessee to ease my pain, but I hung with it and silver came back. I hung with it not because I was too stupid to change my mind, but because I knew that the small silver market is way, way more volatile than gold, AND that silver was only in the early stages of a primary up trend (bull market). That bull market ain't over yet.

Few days ago I was reading something by Jim Willie of the Golden Jackass that really hit home. He implied -- with facts to back him up -- that the "flight to safety" explanation trotted out by the media every time the dollar rises is so much hogwash. It's not a flight to safety, but Nice Government Men fighting to keep the dollar from sinking out of sight. Regardless, as the economy and financial world continue relentlessly to deteriorate, the "flight to safety" folks will surely begin to prefer an airline that doesn't crash every other flight and has better planes than a Sopwith Camel with a canvas skin, namely, gold and silver.

That said, note that the Dollar index today for the third day knocked against the 83.50 ceiling, only to fall back down the ladder. More times it knocks, of course, more likely it is to break thru next time, but it seems odd the dollar's hung up there. Upside it needs to break 83.50 to continue rallying (the most likely outcome), downside it must close below 81.52 to turn down. Jury's still out.

Yen is poking it's head through the downtrend line, but since the trend is firmly down, that probably won't hatch anything but another fall. Closed today 125.92c/Y100 (Y79.41/US$), up 0.19%.

Your job may be bad, but you can thank heaven you don't have the job of nurse-maiding the euro. It dropped to a new low today, $1.2235, down 0.54% on its way to the earth's core. No reason now to expect it to stop before it reaches $1.2000, maybe even $1.1800

Stocks tried to rally today early but spent the rest of the day puking back those gains. Dow ended down 83.17 (0.65%) while the S&P500 joined the song, down 10.99 or 0.81% to 1,341.47.

A reader wrote today and asked me how so-and-so the famous radio personality and financial guru could write a book advising people to invest in mutual funds. My only answer is, either the jails or the loony bins are all full, so he's still running loose.

Listen, if you never hear anything this natural born fool says, hear, mark, learn, and inwardly digest this First Principle of All Investing: ALWAYS align your investments with the primary trend. The trend is your friend. NEVER buck the trend. The primary trend is the tide that carries an investment up (bull market) or down (bear market) for 15 or 20 years. Stocks entered a primary down trend in spring 2000, and that will last 15 or 20 years. Will every stock drop? No, of course not, but the majority will, the indices will, and almost every mutual fund. The guru's advice to buy mutual funds is comes with a guarantee: He WILL lose your money.

On 10 July 1040 Lady Godiva rode naked on horseback to force her husband, the Earl of Mercia, to lower taxes. Can y'all imagine what might have happened if Hillary Clinton had done that to get Bill to lower taxes? One thing for sure, nobody would have looked.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
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© 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. No, I don't.