Thursday, July 26, 2012

The Gold Price Rose Clearing it's Resistance Today but Still Needs to Confirm

Gold Price Close Today : 1615.10
Change : 7.00 or 0.44%

Silver Price Close Today : 2743.1
Change : -1.4 or -0.05%

Gold Silver Ratio Today : 58.879
Change : 0.285 or 0.49%

Silver Gold Ratio Today : 0.01698
Change : -0.000083 or -0.48%

Platinum Price Close Today : 1406.60
Change : -23.40 or -1.64%

Palladium Price Close Today : 569.10
Change : -15.35 or -2.63%

S&P 500 : 1,360.48
Change : 22.59 or 1.69%

Dow In GOLD$ : $165.01
Change : $ 2.08 or 1.28%

Dow in GOLD oz : 7.982
Change : 0.101 or 1.28%

Dow in SILVER oz : 469.99
Change : 8.12 or 1.76%

Dow Industrial : 12,892.43
Change : 216.38 or 1.71%

US Dollar Index : 82.83
Change : -0.809 or -0.97%

The GOLD PRICE cleared another resistance area ($1,608-$1,610) today, confirming yesterday's bump against the even-sided triangle's upper boundary. This also ranks as a breakout through and above that boundary line.

In two days gold has bounded from below the middle of the Bollinger Bands to the top band. Strong, but also suggesting it might take a break and fall back.

Tomorrow will tell us, within this outline: $1,625 - $1,630 is the next resistance. Can the GOLD PRICE clear that? Underneath us is support from $1,600, so gold must hold that. Caution: this may be a short-covering rally that may yet disappoint. It must keep advancing and must not fall below critical support like $1,595 - $1,600.

I remind y'all what's going on. Since May gold hath formed an even-sided triangle, a formation foretelling a breakout and big move, but silent as to which direction. Gold has now broken out skyward through the triangle's upper boundary, but every breakout is untrustworthy and double-tongued until it solidly confirms its intentions. GOLD will paint the Big Yes on a rally when it closes above $1,640, the 150 day moving average.

The SILVER PRICE didn't agree today. While gold rose, silver fell an irritating 1.4 cents to 2743.1c. To my suspicious mind this close looks looks a lot like somebody painting the tape, but y'all know how untrusting I am. Silver reached up and tapped on 2783c, but that came before New York opened, at 7:00 a.m. (Silver touched but did not pierce its 50 DMA at 2777c, and pierced the rising triangle's top boundary, but closed below it.)

I cannot resist saying that were I the Nice Government Men avidly desiring to discourage investors fleeing into gold, I would hit the SILVER market first. Why? It's so much smaller market that it's easier to manipulate. I get more bang for my manipulating dollar.

But let all that alone. We can also aver that what we behold on the chart is a plain impulsive upward move from Tuesday's low, and maybe the backing off today displayed only a market completing that wave up. If so, tomorrow might mount the clouds once again.

Yet moderate that. On Fridays short term traders with profits tend to take the profits and run so they can have a peaceful weekend on their yachts, not worrying about an open position.

"Oh, that Moneychanger's just hedging and talking out of both sides of his mouth!" you might say. Wrong. I'm facing the uncertainties. It appears we have a rally in gold, but I've been sucked in before, so I want confirmation.

Still, I would buy some GOLD here and LOTS of SILVER.

Yesterday came the "trial balloon" from the Austrian EC member, today came the "announcement" from the head of the ECB. I told y'all that Euro was getting too low and the dollar too high for those central bankers to stand. Dollar/euro rate just swam too close to the bottom of their pre-determined range.

Craftily, they caught an enormous herd of shorts in the euro, as everybody and his brother-in-law has been shorting the euro for months. Nothing feeds a market like panicking shorts.

Let us pause here, to get something straight. When you make an "announcement" designed to (mis)lead the market to think one particular way, that "manipulates" the market, regardless whether you bought or sold one euro for one dollar or not. And when the head of the European Central Bank, international criminal and apparatchik Mario Draghi, says publicly he will do "whatever is necessary" to maintain the euro, what conclusion will the public draw? That the euro will rise against the dollar. Unfortunately, they do not draw the correct and inevitable conclusion, namely, that he will inflate endlessly and so in the end gut the euro.

But he did panic the shorts, and momentarily re-bloat stock markets. Central banking manipulation mission completed. Now it's 5:00 p.m., let's go have a martini. We saved the world for one more day.

US dollar index fell a whopping 80.9 basis points (1.04%) clean through the 83 level to 82.826. When it broke 83.50 about 6:00 a.m. EST the dollar Niagaraed to 82.60 by 10:00, then flattened out exhausted.

The central bank criminals have much more work to do before the tame the dollar. It remains above its 20 day moving average (DMA) now 83.04. Yet my admonition a few days ago about markets making new high after new high now bears fruit. The unrelenting fall of US treasury yields (unrelenting rise of their prices) broke yesterday and today, although that reversal has not yet been consummated.

We can, then, expect the dollar to drop more not for mere technical reasons, but for overwhelming political necessities pushing central bank criminals. They must appear to ACT, whether their actions help or hinder, and hinder they will.

Euro obediently gapped up today from its Tuesday low at $1.2042, clean up to its 20 DMA (123.06), although it didn't close above that mark. It closed up 1.08% at $1.2282 (US$1=e0.8142). To give y'all an idea how low the mighty euro hath fallen, it needs to climb above $1.2693 merely to offer the suspicion its trend hath in truth tergiversated.

Yen backed off its attempt to escape its downtrend, dropping 0.05% to 127.87 cents (Y78.2). Tamed. Not about to run away, unless it can clear 128.77c.

Stocks sprinted for the top of their recent range (12,950) with a top at 12,931.22. Settled at 12,887.93, up 211.88 (1.67%). (S&P500 rose 22.13 (1.65%) to 1,360.02.) Yet although that excites stock investors like junkies looking at a car trunk full of cocaine, it is "full of sound and fury, signifying nothing." Neither index managed to punch through that neckline hanging overhead. Just to accomplish that wedge of a breakout, that small beginning, the Dow needs to close above 13,050 and the S&P500 above 1,390.

Just to show y'all that "there is nothing new under the sun," on 26 July 1790 the US Senate passed what later became the Funding or Assumption Act. What was all this? The states had huge debts from the Revolutionary War, some trading as low as 10 cents on the dollar. Under the act the federal government assumed these debts. The author of this scheme was Treasury Secretary Alexander Hamilton, centralizer and lover of central banking and every other doleful and woeful government intervention in the economy. As a result of the Act, some speculators gained a bonanza, but, of course Hamilton knew nothing about that, I'm sure. Compare this to the European Union mess today. It's much the same. The states all issued their own currencies, in which their sovereign debt was denominated, and they inflated those currencies (as did the national government) during the war. Their sovereign debt was sadly depreciated, and unlikely to be repaid. The federal government assumed that debt, and suddenly all that bad state debt became valuable. Conceptually this is precisely what that Austrian EC member proposed yesterday, that the ESM take over all the rotten sovereign debt, and fund that by the ECB. As the French say, "The more things change, the more they remain the same." (Except they say it in French, of course.)

I reckon we're so docile and stupid the banks don't have to think up new ways to rob us. After all, the old ones are working just fine.

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

- Franklin Sanders, The Moneychanger
10:00am-5:00pm CST, Monday-Friday

© 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.