Friday, August 24, 2012

The Gold Price Sparkled this Week Up $53.50 Closing at $1,669.80 the Next Rally has Begun

Gold Price Close Today : 1,669.80
Gold Price Close 17-Aug : 1,616.30
Change : 53.50 or 3.3%

Silver Price Close Today : 30.606
Silver Price Close 17-Aug : 27.995
Change : 2.611 or 9.3%

Gold Silver Ratio Today : 54.558
Gold Silver Ratio 17-Aug : 57.735
Change : -3.18 or -5.5%

Silver Gold Ratio : 0.01833
Silver Gold Ratio 17-Aug : 0.01732
Change : 0.00101 or 5.8%

Dow in Gold Dollars : $ 162.71
Dow in Gold Dollars 17-Aug : $ 169.78
Change : $ (7.08) or -4.2%

Dow in Gold Ounces : 7.871
Dow in Gold Ounces 17-Aug : 8.213
Change : -0.34 or -4.2%

Dow in Silver Ounces : 429.42
Dow in Silver Ounces 17-Aug : 474.20
Change : -44.77 or -9.4%

Dow Industrial : 13,142.95
Dow Industrial 17-Aug : 13,275.20
Change : -132.25 or -1.0%

S&P 500 :
S&P 500 17-Aug : 1,418.16
Change : -1418.16 or -100.0%

US Dollar Index : 81.563
US Dollar Index 17-Aug : 82.610
Change : -1.047 or -1.3%

Platinum Price Close Today : 1,553.10
Platinum Price Close 17-Aug : 1,471.80
Change : 81.30 or 5.5%

Palladium Price Close Today : 651.55
Palladium Price Close 17-Aug : 604.50
Change : 47.05 or 7.8%

Following the seasonal pattern, it seems, the silver and GOLD PRICE have begun a rally in August. Before I follow that up, bear this in mind for everything else I say about metals today. There still exists a possibility that silver and gold will correct sharply after this rally, leaving y'all thinking that the bottom has dropped out. Might even revisit those lows that have held so strongly for a year. If that does happen, it will only be the bull trying to shake off new riders, for gold and silver will return with a vengeance.

On the other hand, having now reached the downtrend lines from their 2011 lows, silver and gold may merely return to their breakout points ($1,625 and 2830 cents) for a final kiss good-bye. A third route: silver and gold next week punch clean through resistance at 3100c and $1,680 and never look back.

Regardless, it is best to BUY THE BREAKOUTS and too much subtlety will stall you out of buying. So even facing all those possible reactions, I would still buy the breakout. If the reactions come, know that they are merely confirming the breakout, and buy more.

From its 2799.5c close last week the SILVER PRICE gained 261.1c or 9.3% to 3060.6. Whoo-eee! Gold sparkled but only gained $58.50 (3.3%) to $1,669.80. The GOLD PRICE punctured and stepped through its 200 DMA ($1,649.56) and 150 DMA ($1,642.09), while silver yesterday closed right at, and today above, its 200 DMA (3051). In a second I'll explain why that doesn't mean as much for silver as for gold, but meantime all those "trend followers" with money burning up to be invested someplace saw that 200 DMA crossover and hopped aboard, adding fuel to the rise -- as if it needed fuel, since both metals have shot straight skyward.

On the weekly chart, The GOLD PRICE fury this week took it above the 50 week moving average for the first time since March. Why do you and I care about the 50 WMA? Because since this gold bull began charging, it has been skimming along atop that 50 WMA except for breaches in 2008 and 2011 and 2012. In silver the 50 WMA (now 3096c) has performed the same service, and silver is mere fingertips away from crossing over that.

On a daily chart, more volatile silver treats its 300 DMA as other markets treat their 200 DMAs. That 300 DMA now stands above silver at 3263c, and crossing that will confirm silver has left the dreary woods of correction.

After the huge rise we saw last week, it won't surprise me if silver and gold correct next week, gathering strength to break those overhead downtrend lines. Their rises are fed by the want of other investment opportunities. Other markets are flat or struggling, like stocks, and government bonds offer a zero or negative return after inflation. Lots of hot money is looking for a home. Gold may be upgraded 100% valuation status for bank reserves under new banking regulations, and that would help as well, especially when government bonds are offering negative returns.

Bottom line: it appears the next rally in silver and gold has begun. I don't claim to be anything more than a natural born fool from Tennessee, but ciphering around with some past gold moves (I use a board and a piece of charcoal), I arrived at some shocking forecasts: gold above $2,650 by next June, and at the top of this leg $4,125. Those are minimum figures. Now don't go chiseling those numbers on Stone Mountain next to Lee, Jackson, and Jefferson Davis. They're just forecasts, not prophecies, and loaded with all sorts of iffy assumptions. But they do sort of take your breath away, don't they?

Makes you want to buy some gold and silver.

It's been many a week, yea, many a month since we've seen silver and gold dance like they did this week. Yet the falling dollar helped stocks not a bit. Labor strife at Lonmin's South African mine at Rustenburg drove platinum and palladium up a tree. I believe we will look back two months from now and say, "Yep, that's where silver and gold broke out into a new rally."

The currency story is quickly told. US dollar index lost 1.3% this week, falling to 81.563 today. No doubt this arises from the Nice Government Men's market operations, as they need to float that euro. Surprise of the week was the yen, unusually and poisonously strong for export-addicted Japan. Euro backed off today 0.36% to $1.2518, bouncing off $1.2600 resistance. Still, it remains in an uptrend. Yen backed off 0.26% to 127.07c (Y78.70). I can't imagine those Japanese NGM letting it rise much higher.

STOCKS had a rotten week, falling to the bottom boundary of their rising wedge formation. Dow would have finished the week down over 200 points if it hadn't rallied today and pared that loss to 132.25 (1%). Dow gathered in 100.51 (0.77%) today to a 13,157.97 close. S&P500 rose 9.05 (0.65%) to 1,411.13. Unless the Dow closes below 13,000 stocks probably have one last upward spurt before the weeping, wailing, and tooth-gnashing begins.

Y'all enjoy your weekend.

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.